MBA Says Repo Property Prevention Program Moving Slowly
The loan refinancing portion of the Obama administration’s repo property prevention program is running slowly, according to officials of the Mortgage Bankers Association.
The MBA said only 13,000 loan refinancings were accomplished during the first 3 months after the launching of the federal repo property prevention program which included the Home Affordable Refinance Program. Federal officials who crafted the foreclosure prevention program originally projected that up to 5 million financially troubled homeowners would he helped by the program.
Because of the relatively weak response to the repo property prevention program, the MBA lowered its mortgage origination forecast for the year 2009. This month, its mortgage origination forecast for the year has dropped to $2.03 trillion for 2009, a decrease of more than $700 billion from the mortgage forecast it released in March. Of the more than $700 billion drop, over $600 billion represented the value of HARP loan refinancing initially predicted to be completed.
HARP was designed to help homeowners whose home loans are owned or guaranteed by Freddie Mac and Fannie Mae. Homeowners can lower their monthly payments by refinancing into lower-rate loans as long as they meet the loan-home value ratios and payment history requirements.
MBA President John Courson said among the reasons for the slow take-up of the program is the inability of mortgage lenders to cope with large numbers of loan refinancing applications. He said that many lenders have not yet enhanced their systems to cope with the new provisions of the HARP scheme.
Lenders are still studying the provisions of the HARP and training their personnel on how to implement HARP guidelines and how to deal with loan refinancing applicants.
According to insiders, many lenders are prioritizing regular loan refinancing applications because they are easier to process and they do not have to consider many factors when going through the applications.
Another slowdown factor is the difference in guidelines implemented by Freddie Mac and Fannie Mae. Freddie has stricter rules than Fannie Mae.
Top MBA economist Jay Brinkmann said his organization lowered the mortgage origination forecast released in March because the original forecast included strong estimates of loan refinancing under the repo property prevention program which the Obama administration launched with much anticipation and hope in March.
Brinkmann also added that it is hard to reach the original loan refinancing goals of the repo property prevention program because of the recession and the rising mortgage rate levels.
