An article in today’s Wall Street Journal lays out some of the problems with the Home Affordable Refinance Program. “Borrowers Miss Out on Refinance,” reads a headline.  According to WSJ, HARP is not reaching scale because it doesn’t address the needs of people who are under water in their mortgage.

HARP is struggling for several reasons. For one, the program still isn’t designed to meet the needs of borrowers. Second, banks don’t appear to feel compelled to act with integrity in their efforts to make HARP loans. Last, Fannie and Freddie are imposing new charges on loans that make it harder for cash-strapped consumers to make refinances.

This is a shame, of course.  Refinance rates are very low.  Even for borrowers with the best prime mortgages, refinance rates are at historical lows.  The refinance market should be booming.  While last year was a busy year for refinances, it was not nearly as high as it should have been in the context of these low interest rates.

In 2003, when refi rates were roughly the same as those available to prime borrowers now, (more…)

News reports would have you believe that servicers are doing their best to work out problem loans.  The other day, Treasury announced that the HAMP program had realized its 500,000th loan modification.

The devil is in the details, though.  These loan modifications, by and large, are merely short-term band aids.  For borrowers with real problems, most of these modifications are not going to make a difference.  Consider the breakdown on the nature of the loan modifications:

• 95,729 refinancings (Home Affordable Refinance Program)
• 362,348 three-month trial modifications (Home Affordable Modification Program)
• 1,711 permanent mortgage modifications. (HAMP)

You are reading that correctly.  Of the 459,788 modifications recorded as of September 1, 2009, less than 4/10th of one percent of those actions resulted in a permanent modification.  By and large, the efforts of HAMP are serving to put a (more…)