The Treasury Department will support legislative efforts to increase refinancing opportunities for underwater borrowers that are trapped in legacy private-label loans. But the department does not want to see an expansion of the HARP program, according to a special housing finance advisor to Treasury secretary Jack Lew.
Speaking at an ABS conference in Las Vegas, Michael Stegman noted that more than 2 million Fannie Mae and Freddie Mac borrowers are still eligible for the Home Affordable Refinancing Program to lower their interest rate.
“We believe that the current marketing campaign that Federal Housing Finance Agency and the GSEs are pursuing is a good way to make sure that homeowners with little or no equity in their homes know about this opportunity,” Stegman said yesterday.
However, changing the May 31, 2009 HARP cutoff date would help very few borrowers and “advancing the (cutoff) date would do more harm than good by prolonging market and investors uncertainties.”
Stegman also indicated that Treasury takes a dim view of eminent domain, which some cities want to use to condemn private-label loans and refinance the homeowners based on current property values.
“While we understand their frustration, we think refinancing legislation is a better way to go. So as we work to reform the housing finance system, we will seek to ensure that neither the source of one’s mortgage nor who owns the credit risk should determine a borrower’s eligibility for refinancing or mortgage assistance,” Stegman said.