NEWARK, N.J. The Federal Housing Finance Agency won't keep renewing initiatives like the Home Affordable Refinance Program in perpetuity, even if it is extended again before it expires in December, Director Mel Watt said Wednesday.
"HARP was put in place to deal with people who got burned during a meltdown period So I don't think in the long term you can think about extending the deadline and extending it because it wasn't designed to do that," Watt told reporters following an FHFA outreach program in Newark, N.J.
Although mortgage servicing rules implemented by the Consumer Financial Protection Bureau include procedures for helping distressed borrowers, Watt expects to see the range of loss mitigation options created to respond to the foreclosure crisis eventually wind down.
"When you ask, 'is that the new normal,' my answer to that is no because when we look at more recent lending practices, there shouldn't be a need for these kinds of programs," Watt said. "You're still going to have people default, but not at the level that resulted from the meltdown."
The FHFA estimates that 3.2 million borrowers have completed a HARP refinance, including more than 95,000 in New Jersey. Borrowers in the Garden State have lowered their monthly mortgage payment by an average of $222 per month using HARP.
HARP and its sister initiative, the Home Affordable Modification Program, are critical resources in New Jersey, where a lengthy court process can lead to foreclosure timelines as long as three years. The FHFA estimates an additional 20,000 New Jersey borrowers are eligible to refinance through HARP, and it held the Wednesday outreach program to encourage local housing counselors and community advocates to spread the word about HARP and other loss mitigation efforts.
"Anyone you know who's thinking about packing up and leaving because they feel all hope is lost, we have a full suite of programs to help people there are options for virtually any issue a borrower is going through," said Yvette Gilmore, Freddie Mac vice president of servicer relationship and performance management, during the town hall-style event.
But if the confusion and frustration expressed by some of the roughly 50 people who attended the event is any indication, that's going to be a tough task. The event was targeted at local lending and housing counseling workers, many of whom recounted bad experiences with unresponsive servicers or confusion over what options borrowers actually have at their disposal. Others were skeptical about the details of HARP, which enables underwater borrowers current on their loans to refinance.
"We don't care about appraised value from a credit underwriting perspective," said Robert Koller, Fannie Mae director of credit risk management. "We find more value from a Fannie Mae, Freddie Mac perspective, and from a lender and borrower perspective, is if we have a borrower paying, keeping that person in the home is best for all the parties."
The Newark event was the fifth of its kind held across the country, and FHFA officials follow up with attendees in each city to reinforce its message.