Obama Administrations Extends Loser HAMP And HARP Mortgage Modification Programs For 2 Years

Confounded Interest ^ | 05/30/2013 | Anthony B. Sanders

[whitedog57]

Put into place in 2009, the Home Affordable Modification Program (HAMP) and the Home Affordable Relief Program (HARP) has been extended for two more years by the Obama Administration.

The Home Affordable Modification Program (HAMP) had the goal of helping 3 to 4 million borrowers avoid foreclosure. So far fewer than one million borrowers are in permanent modifications, and default rates on these modifications are high. As of March 31, 2013, the oldest HAMP permanent modifications, from the third and fourth quarter of 2009, are redefaulting at a rate of 46.1 percent and 39.1 percent. HAMP permanent modifications from 2010 also had high redefault rates, ranging from 28.9 percent to 37.6 percent.

With house prices rise rapidly in parts of the country (mostly west coast and Florida), it is curious that the Administration would extend loan modification programs, particularly ones that have worked as poorly as HAMP and HARP.

I guess it is a case of “If you don’t succeed, try, try again.” Of course, they could let the free market fix the problems and cancel the inferior HAMP and HARP programs, but that is apparently too much to ask. “The housing market is gaining steam, but many homeowners are still struggling,” Treasury Secretary Jacob Lew said in a release announcing the extension. In other words, they will never stop interfering the economy as long as someone is struggling.

Now here is a really disturbing fact. The Mortgage Bankers Association (MBA) in their Weekly Application Survey disclosed that the Home Affordable Refinance Program’s (HARP) share of refinance applications increased to 32 percent. So, if you exclude HARP, the Refinance Index would be 32 percent lower. The MBA Refi index (white line) on Wednesday had already fallen substantially from the previous week and mortgage rates increased (yellow line).

With Treasury and mortgage rates rising, mortgage refis will naturally fall. But if HAMP and HARP vanished, we would see even fewer refis.

So, mortgage modifications are apparently dependent on government programs, even if the programs are losers.

But that’s the way, uh-huh, uh-huh, they like it.

[whitedog57]

Obama and The Fed will NEVER stop interfering.

[Venturer]

I believe what they are saying is that people refinanced to put off being foreclosed on, then didn’t pay anyway, so now Obama has given them another free shot at living a bit longer in a home they have no intention of paying off.

I guess that makes sense as reparations.