Financial services organizations are urging the administration to quickly extend for one year an expiring housing program geared toward helping homeowners who are current on their mortgages but owe more than their homes are worth.
The Home Affordable Refinance Program should be extended by March 12 to minimize further disruptions in the market such as foreclosures and home price declines, the American Bankers Association, American Financial Services Association, Consumer Mortgage Coalition, Housing Policy Council and Mortgage Bankers Association said in a Feb. 18 letter to Treasury Secretary Timothy F. Geithner.
The program, known as Harp, lets borrowers refinance loans owned by Fannie Mae or Freddie Mac that have loan-to-value ratios of up to 125%. Harp expires June 10, but because rates must be locked in at least 60 days in advance, the groups said swift action is needed. "To keep creditworthy, performing borrowers in their homes and out of unnecessary foreclosure, to maintain neighborhoods and home prices and to protect Fannie Mae, Freddie Mac and taxpayers from unnecessary losses, we urge that Harp be extended for one year, without delay, until house prices rebound," said the letter.
The groups said it is crucial to extend the program since it is the biggest source of mortgage debt relief for underwater borrowers who are on time with their payments.