Make Harp 3.0 Happen

Advocating for The Expansion of the Home Affordable Refinance Program

Month – February 2013

National Outlook for The Rebuilding American Homeownership Pilot Program

I have received a lot of questions about when the Rebuilding American Homeownership that is being piloted in Oregon’s Multnomah County will be available to people in other areas of the country. As a refresher The Rebuilding American Homeownership Pilot Program (RAHPP) is a plan proposed by Oregon Senator Jeff Merkley that would allow underwater homeowners additional refinance opportunities even if their mortgage is not owned by Fannie Mae or Freddie Mac. The program is being piloted in Multnomah County which is in the Portland, Oregon area. It is being funded from U.S. Treasury “Hardest Hit” Funds that were awarded to Oregon. Many people have hopes that RAHPP can evolve into HARP 3.0 and become available nationwide. I hate to throw cold water on the hopes of the many people that really need this program to be available to them, but I think it is very unlikely that RAHPP gets a green light nation wide. The funds just aren’t available to support it nationally, and I’m highly skeptical that Congress would be able to pass legislation to fund the program for nationwide launch. I think a more likely scenario is certain states will follow Oregon’s lead and tap into existing funds such as the U.S. Treasury “Hardest Hit” fund (or potentially other federal funds that have been earmarked for economic stimulus) to deploy their own refinance programs. If the pilot program in Multnomah County works out well it is likely other states will use it to model the refinance programs they launch. The question becomes how grand can the scope of Merkley Mortgage be if it is rolled out by states using U.S. Treasury Funds? Only 18 states were awarded “Hardest Hit” Funds and it is likely that states would want to target specifically hard hit real estate markets if and when they launch programs similar to RAHPP. The bottom line is I think RHAPP will expand later this year to select areas in select states but I don’t believe it will even become available nationwide. If you live in a state that received “Hardest Hit” funds you probably have a better chance seeing some version of this program than states that did not receive funds from the Treasury. Here is a list of states that were awarded U.S Treasury funds: Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Washington DC.


The Merkley Mortgage: HARP 3 Pilot Program Could Help Non Fannie and Freddie Underwater Homeowners

Last week the U.S. Treasury Department approved a pilot program in Oregon’s Multnomah County that would allow underwater homeowners additional refinance opportunities even if their mortgage is not owned by Fannie Mae and Freddie Mac. The program draws heavily from Senator Jeff Merkley’s Rebuilding American Homeownership proposal made last year. The pilot is officially known as the Rebuilding American Homeownership Pilot Program (RAHPP). RAHPP, which uses funds from the U.S. Treasury “Hardest Hit” Fund, could serve as a national model for expanding HARP to homeowners with non-GSE held home loans. The plan works like as this. Any underwater homeowner that is current on their mortgage and have no other residential property can choose between two refinancing options:


  • A 30-year fixed-rate loan at 5 percent
  • A 15-year fixed-rate loan at 4 percent

All loan types qualify, the current mortgage does not have to have been originated before May 31, 2009, and the current mortgage need not be secured by Fannie Mae or Freddie Mac. The only other requirement is the homeowner must plan on staying in their home for at least five more years. There have been no details yet released on how long the pilot program will run, what the success criteria for RAHPP is, or when it may be expanded beyond Multnomah County, however other states are said to be considering using the U.S. Treasury “Hardest Hit” Fund to finance similar initiatives. At the very least it appears that individual states will have the U.S. Treasury’s blessing to move forward with their own refinance plans for underwater homeowners.


2013 State of the Union Address and the #DumpDeMarco Initiative

Tonight President Obama will deliver the 2013 State of the Union Address. The economy is expected to once again be a main focus of this year’s address, however it is unclear if housing policy will be a prominent topic like last year. During the 2012 State of the Union Address President Obama pushed for a broad home refinance initiative aimed at aiding underwater homeowners. That laid the groundwork for the #myrefi HARP 3.0 initiative. Due to partisanship politics in Congress and amongst policy makers at the FHFA HARP 3.0 has yet to become a reality. The President may or may not emphasize housing policy during the 2013 State of the Union Address, however the 12 million underwater homeowners in the U.S. can still use this opportunity to raise the priority on this issue via social media. Tracy Van Slyke of the New Bottom Line has been organizing a movement that calls for President Obama to fire FHFA director Ed DeMarco within the first 100 days of his second term as president. Tracy is using the opportunity to make hashtag #DumpDeMarco trend on twitter during the State of the Union Address. You can join this effort by tweeting the following message at the start of the address:

Who is the roadblock to economic progress? Meet the Bush appointee that works for Obama. #DUMPDeMarco #SOTU


To make the effort even easier Tracy has set up a Thunderclap project to time the tweets to occur at the exact same moment for maximum effect. Simply register for the #DumpDemarco Thunderclap and your voice can be heard during the State of the Union Address. Here is the link to join the effort:


New Menendez-Boxer HARP 3.0 #myrefi Bill Introduced in Senate

Senators Robert Menendez and Barbara Boxer have introduced a new bill to the 113th Congress aimed at expanding the Home Affordable Refinance Program by removing barriers that prevent existing Fannie Mae and Freddie Mac borrowers from taking advantage of the HARP program. The bill is very similar to a proposal they sponsored last summer. The bill, S. 249 – The Responsible Homeowner Refinancing Act of 2013, would do the following:


  • Ensure that streamlined refinancing is available and consistent for all Fannie and Freddie borrowers, regardless of whether they are underwater or not
  • Reduce up-front fees on refinances
  • Eliminate appraisal costs for all borrowers
  • Remove additional barriers to competition
  • Extend HARP by one year, to allow eligible borrowers more time to access the program

The bill has extensive support from housing advocacy groups and economists. 21 Senators have also added their names as cosponsors of the bill. However, at this time the support is strictly partisan. No Republican has yet to cosponsor or endorse the bill. S. 249 has been referred to the Senate Committee on Banking, Housing, and Urban Affairs. The best way to show support for this bill would be to write or call the offices of the GOP members of the Committee on Banking, Housing, and Urban Affairs and urge them to support S. 249 – The Responsible Homeowner Refinancing Act of 2013. Here is the list of Republicans that sit on the committee:

House Democrats Urge President to Dump FHFA Director Ed DeMarco

45 Democratic Members of the House of Representatives sent a letter today to President Obama urging him to fire Ed DeMarco, the acting director of Federal Housing Finance Agency, and appoint a permanent director to lead the FHFA. DeMarco has been a lighting rod among housing advocacy groups for his refusal to take actions to aid underwater homeowners. He recently nixed a pilot program endorsed by the U.S. Treasury that would allow strategic principal reductions for some underwater homeowners. This is significant news for those hopeful of the #myrefi HARP 3.0 initiative. The FHFA director has broad powers in overseeing the HARP program. A new director would likely be willing to extend the HARP securitization cutoff date and perhaps allow re-HARPing.

The letter was signed by the following House members: The following Members signed the letter: Reps. Ami Bera, Lois Capps, Tony Cárdenas, Matt Cartwright, Judy Chu, David Cicilline, Wm. Lacy Clay, Steve Cohen, John Conyers, Jr., Jim Costa, Elijah E. Cummings, Susan Davis, Keith Ellison, Anna G. Eshoo, Sam Farr, Marcia L. Fudge, John Garamendi, Joe Garcia, Al Green, Raúl M. Grijalva, Rubén Hinojosa, Mike Honda, Hank Johnson, Marcy Kaptur, Barbara Lee, Zoe Lofgren, Doris Matsui, James P. McGovern, Jerry McNerney, George Miller, Jerrold Nadler, Grace Napolitano, Eleanor Holmes Norton, Mark Pocan, Lucille Roybal-Allard, Linda T. Sánchez, Loretta Sanchez, Janice Schakowsky, Adam B. Schiff, Louise M. Slaughter, Jackie Speier, Eric Swalwell, Mike Thompson, John. F. Tierney, and Henry Waxman.

Here is the full letter:

February 7, 2013

The President

The White House

1600 Pennsylvania Avenue, NW

Washington, DC 20500

Dear Mr. President:

We are writing to urge you to nominate a permanent director of the Federal Housing Finance Agency (FHFA). We applauded your nomination of Joseph A. Smith Jr. to this position in 2010, and we were disappointed when his nomination was blocked in the Senate. However, it has been three and half years since Edward J. DeMarco was designated as the Acting Director of the agency. We believe your reelection is a prime opportunity to put forth a new candidate who is ready and willing to implement all of Congress’ directives to meet the critical challenges still facing our nation’s housing finance markets.

Although the housing sector is recovering slowly, Federal Reserve Chairman Ben Bernanke warned in a speech in November that “the housing revival still faces significant obstacles,” and that the “degree to which that challenge is met will help determine the strength and sustainability of the economic recovery.” As of last month, approximately 10.9 million residential borrowers still owe at least 25% more on their mortgages than the value of their homes. It is imperative that we have a strong leader at FHFA to take on these challenges, strengthen the housing market, and promote our nation’s continued economic recovery.

Under the Housing and Economic Recovery Act of 2008, Congress charged the Director of FHFA with overseeing Fannie Mae and Freddie Mac to ensure that their operations “foster liquid, efficient, competitive, and resilient national housing finance markets (including activities relating to mortgages on housing for low- and moderate-income families involving a reasonable economic return that may be less than the return earned on other activities).” In addition, as part of the Emergency Economic Stabilization Act of 2008, Congress directed FHFA to “maximize assistance for homeowners” and “to minimize foreclosures,” and it granted explicit authority to modify mortgage loans through the “reduction of loan principal.”

During Mr. DeMarco’s tenure, he has declined to fully and effectively implement these laws. When Mr. DeMarco testified before the Committee on Oversight and Government Reform in November 2011, he asserted that the “use of a principal reduction within the context of a loan modification is not going to be the least-cost approach by the taxpayer to allow this homeowner an opportunity to stay in their home.” His testimony has since been contradicted by FHFA’s own data, which indicate that principal reduction loan modifications could save U.S. taxpayers billions of dollars compared to allowing underwater homes to go into foreclosure, and that principal reduction loan modifications could save taxpayers hundreds of millions of dollars compared to Mr. DeMarco’s preferred alternative of principal forbearance.

More troubling, Mr. DeMarco refused to allow the implementation of a pilot program to examine whether a principal reduction program could reduce costs to taxpayers while helping borrowers stay in their homes. One such pilot program, which was developed by Fannie Mae and Citibank after months of study and analysis, was terminated due to unspecified “operational” challenges. By not supporting this pilot program—even after the Department of Treasury offered funds to help cover its operational expenses—Mr. DeMarco demonstrated that he is not interested in obtaining real-world evidence that might contradict his pre-established views.

Finally, rather than taking steps to help homeowners facing foreclosure, FHFA recently proposed an action that appears to penalize borrowers arbitrarily. Specifically, FHFA proposed increasing state-level guarantee fees charged by Fannie Mae and Freddie Mac on new borrowers in the five states with the longest average foreclosure timelines. Yet, FHFA provided no analysis to support its recommendation. If implemented, this proposal may unfairly punish borrowers without identifying or addressing specific factors that lengthen foreclosure times, such as inadequate business practices by mortgage companies servicing loans under FHFA’s conservatorship.

Ensuring that FHFA implements Congressional directives to support the most liquid, efficient, competitive, and resilient housing finance markets is a matter of national urgency. For these reasons, we strongly urge you to nominate an FHFA Director who is ready to fulfill this mission and address the many challenges still facing the nation’s housing finance markets.


White House Petition to Eliminate HARP Cutoff Date – The Final Push

The White House petition to eliminate the HARP cutoff date and allow re-HARPing has just one week left before it closes. It does not appear it will reach the goal of 25,000 signatures that were required to elicit a response from the White House. It will take major media attention to get there, and thus far our little petition has been ignored by the media. However, I urge you all to continue to sign the petition and recruit others to sign it as well. Occasionally the White House does issue responses to petitions that do not reach the specified threshold. There are obviously low level staffers that monitor the petition site, and the greater the signature totals the more likely it is that the petition will be escalated to the senior staffers in the Administration. The fact is that although we are far short of 25,000 signatures, the petition has been building steam due to a strong word of mouth effort. Our petition has gotten 10% more signatures this week than last. Generally, without media attention these petitions taper off dramatically after the first few days they become public. They get buried at the bottom of the listings on the White House site and no one can find them without specifically knowing what to look for. I’ve been monitoring all of the current petitions (yeah, I’m kind of a geek like that) and no current petition within two weeks of closing has experienced a growth in signature rates from the prior week. People are increasingly finding the petition and signing it because the word of mouth is strong. In addition, website traffic to is exploding. This site has ben online for less than three weeks but has already grown to more than 500 unique site visitors a day, most of which are attributed to search traffic. Yesterday, Google searches alone brought more 300 visitors the site. Although the petition is about to end, the grassroots movement to expand HARP has only just begun. So please tell your friends, family, and colleagues to sign the petition. Don’t forget to spread the work on twitter, facebook, Google+, or any other social networks you participate in. And finally, please join the Make HARP 3.0 Happen mailing list so I can engage you and keep you informed on any future grassroots initiatives that I plan to launch.

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