A plan to let more people refinance mortgages even if they have no equity in their homes won’t go far enough to help the nation’s 11 million underwater borrowers, according to U.S. House Democrats.
Edward J. DeMarco, acting director of the Federal Housing Finance Agency, told 17 Democrats at a meeting today that he will fix the Home Affordable Refinance Program, which lets borrowers take new loans for up to 125 percent of a home’s value, according to Representatives Elijah Cummings of Maryland and Dennis Cardoza of California, who led the group.
Cummings, who sought the meeting with DeMarco after criticizing FHFA’s performance, said the changes could help an estimated 600,000 to 1 million borrowers by raising the maximum loan-to-value ratio above 125 percent.
“We think he needs to go further,” Cummings, the top Democrat on the House Oversight and Government Reform Committee, told reporters after the meeting in Washington. Cardoza is co-chairman of Democrats’ Task Force on Housing Stabilization.
Democrats and Republicans in Congress have faulted DeMarco and Treasury Secretary Timothy F. Geithner for doing too little to revive home prices and reduce foreclosures in the wake of the 2008 credit crisis. As chief regulator for government-owned finance firms Fannie Mae and Freddie Mac, DeMarco oversees more than half of the U.S. home-loan market.
President Barack Obama introduced HARP in March 2009 in a bid to prevent defaults among borrowers who are current on their payments and have little or no equity. The program was predicted to help as many as 5 million people. About 840,000 homeowners have refinanced through the program.
In a written statement, DeMarco said he would deliver details of his plan by the end of the month and questioned the numbers cited by Cummings.
“It is premature to estimate how many borrowers will refinance as a result of these efforts,” DeMarco said. “Our goal is to provide expanded refinance opportunities for all HARP-eligible homeowners and for the changes to have a meaningful impact.”