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Thursday, March 4, 2010

If at first you don't succeed, extend...

If at first your program doesn't succeed, extend it in hopes that doing the same thing longer will somehow magically make it work. That seems to be the government's answer to the failure of the HARP program, which so far has succeeded in helping less than 10% of the targeted 2 million homeowners that it was created to help. The Federal Housing Finance Agency made the following Press Release on March 1, 2010.

(March 1, 2010) Washington, DC -- Federal Housing Finance Agency Acting Director Ed DeMarco today announced the extension of the Home Affordable Refinance Program, (HARP), a refinancing program administered by Fannie Mae and Freddie Mac, to June 30, 2011. The program is a key component of the Administration's Making Home Affordable Program announced last February. The HARP program expands access to refinancing for qualified individuals and families whose homes have lost value. The program was set to expire on June 10 of this year.

"FHFA has reviewed the current market situation and the state of mortgage insurance availability and has determined that the market conditions that necessitated the actions taken last year have not materially changed," said DeMarco. "Accordingly, to support and promote market stability, and to encourage lenders and other mortgage market participants to fully adopt the HARP program, including the implementation of the October 2009 expansion of loan-to-value ratios (LTVs) to 125 percent, FHFA is authorizing the extension of HARP until June 30, 2011."

In 2009, Fannie Mae and Freddie Mac purchased or guaranteed more than 4 million refinanced mortgages. Of this total, 190,180 were HARP refinances with LTVs between 80 percent and 125 percent. The HARP began in April 2009 and has grown over the past few months. For more information on Fannie Mae and Freddie Mac refinance activity, see FHFA's monthly Foreclosure Prevention & Refinance Report. Additionally, homeowners can visit additional information on the program.

In addition, President Obama has been making noises about putting a freeze on all mortgage foreclosures until every distressed homeowner is allowed to go through the HARP program. While that sounds ridiculous on the surface, it will take something like that, which can bring some pain onto the lenders themselves to get their attention to this or other federal programs aimed at stemming the foreclosure tide. The biggest reason that HARP and other programs haven't worked is that it is still in the banks best interest to seize the houses through foreclosure, rather than work out a plan with the homeowner that results in the banks taking a loss on the loan.

So what will work? We've had HAMP and HARP and HAFA and they haven't made much of dent in the issue, which is really that most homeowners are underwater on their loans and walking away seems like the best solution when they get into trouble due to a layoff, an illness or any other issue that disrupts lives. None of these programs deal with the fact that over a Trillion dollars of home value has vanished - it's gone, never to return. It exists nowhere now but on the books of the banks. Somehow that issue has to be dealt with before we'll get any relief out in the hitherlands.


Norm Werner is a full-time, full-service Realtor working out of the Milford office of Real Estate One, Michigan's largest and most successful real estate company. To learn more about Norm or the local real estate market in the Milford, Michigan area visit one of his Web sites listed below:

For buyers and sellers -

For first-time buyers -

For people moving to Milford, Michigan -

For people in distress with their home -

For people interested in the history of Milford Michigan, visit

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