Obama: There is Hope for 'HARP 3' Refinancing for Underwater Borrowers

Obama: There is Hope for 'HARP 3' Refinancing for Underwater BorrowersPresident Obama continued to push a restructuring of the housing finance market in Phoenix Wednesday, taking questions in a unique question-and-answer session with the public, alongside the CEO of the real estate site Zillow.
Many questions centered on HARP, the government’s Home Affordable Refinance Program that has helped millions of homeowners refinance into historically low rates — but only if their mortgages are owned by Fannie Mae and Freddie Mac.
Currently in its rejuvenated “HARP 2” phase, the four-year-old program skyrocketed in popularity last year when loan-to-value (LTV) caps were removed, opening up qualification for hundreds of thousands of borrowers who owe more than the value of their homes.
For about a year, Obama has been pushing to get Congress to create a  “HARP 3” that would expand eligibility to mortgages not held by Fannie or Freddie. That’s about 40 percent of home loans.
“I think there should be hope … Now, Congress, I think all of us recognize, has been a little broken lately,” Obama said in response to a question on HARP 3. “But the good news is … that there are Republican and Democratic senators, at least, who have been in a conversation about how do we learn the lessons of the past and start building a firmer foundation for housing going forward.”
Since lawmakers from both parties want to gradually unwind the taxpayer exposure of Fannie and Freddie, the two quasi private entities taken over by the federal government in the fall of 2008 as they teetered on the brink of collapse.
But with a housing recovery well on its way and both Fannie and Freddie in profit again, Obama said it is time to initiated HARP 3 while both sides are talking home-finance reform.
The goal of Obama and Congress is to get the roles of Fannie and Freddie primarily into the private market, and get the government out of guaranteeing the vast majority of home loans.
“As part of a package, you could see Fannie and Freddie reform that protects taxpayers, puts housing on a more stable footing, but in the interim also provides some immediate relief to homeowners, giving them a chance to refinance while interest rates are still low,” Obama said.
Here is the full text of the Q&A with Obama Wednesday from Phoenix.

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