Fannie Mae Overseer to Start Push on Making Refinancing EasierJody Shenn
The regulator of Fannie Mae and Freddie Mac is planning to look for ways that the U.S.-backed mortgage giants can make refinancing loans easier for borrowers.
Federal Housing Finance Agency Director Melvin L. Watt disclosed the push Friday at an event in which he announced an extension through 2016 of the two companies’ Home Affordable Refinance Program for loans issued before the housing crash and their use of the Home Affordable Modification Program for struggling borrowers.
The FHFA is “going to use this time to explore possible streamlined refinance solutions for future enterprise loans,” Watt said in remarks prepared for a Los Angeles speech. “This evaluation will consider the lessons learned from the HARP program and how those might apply in a non-crisis environment.”
The comments underscore how the FHFA is shifting under Watt’s leadership toward seeking to expand access to credit after the housing market stabilized and number of troubled borrowers dropped.
Fannie Mae and Freddie Mac, which have operated with explicit taxpayer backing since being seized in 2008, before the financial crisis allowed refinancing with reduced vetting of paperwork when it was replacing at lower rates earlier loans the two companies already guaranteed.
Under HARP, they offered an even broader version of the flexibility to homeowners with little or no equity and loans taken out before early 2009, even while phasing out streamlined refinancing for other borrowers.
More than 600,000 borrowers can still take advantage of the program, Watt said, after almost 3.3 million used HARP since 2009. He said he doesn’t expect its lifespan will be extended again.
HARP and HAMP were scheduled to end this year after previous extensions. While the FHFA plans to also “consider how best to build on the lessons of HAMP,” Fannie Mae and Freddie Mac’s use of that program won’t be extended again, he said.
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