WASHINGTON (Reuters) - More than 3 million homeowners have been able to take advantage of a federal program to lower their monthly mortgage payments, a U.S. regulator said on Monday, showing the initiative has made progress even though it still lags initial expectations.
The Home Affordable Refinance Program, or HARP, allows borrowers with loans backed by Fannie Mae and Freddie Mac to cut monthly payments by refinancing at lower interest rates even if they have little to no equity in their homes.
“Three million HARP refinances is an important accomplishment and represents real help to families and communities still struggling as a result of the mortgage crisis,” said FHFA Director Mel Watt in a statement. “We are continuing our efforts to make sure that those who can take advantage of this program have the information they need to do so.”
The Obama administration in 2009 rolled out the HARP program. But at first, it predicted it would help as many as 5 million homeowners. However the program had limited impact in its early days and was plagued by complaints from consumers about lost paperwork and restrictive eligibility requirements.
HARP loan volume started to pick up about two years ago after the FHFA made policy changes in 2011 that made it easier for borrowers to switch to cheaper loans and lenders became more willing to take part in the program. As a result, a bulk of HARP participants refinanced in 2012 and 2013.
Now it is viewed as one of the more successful government anti-foreclosure efforts. In 2013, FHFA extended the HARP program deadline by two years to December 31, 2015 and launched a nationwide campaign to educate eligible homeowners on how to participate.
Under the program, financial incentives are given to mortgage companies to reduce loan payments to affordable levels. Only borrowers with loans originated by May 31, 2009, can qualify and some housing advocacy groups and lenders have lobbied to widen HARP to cover more recent loans as well.
The Obama administration has said changing the eligibility date is unnecessary, but the decision rests with FHFA Director Mel Watt. Watt, who took office last month, has not yet rendered an opinion.
The Obama administration has, however, voiced support for expanding HARP to include loans that are not currently backed by Fannie Mae and Freddie Mac. The effort would require action by Congress.
Fannie Mae and Freddie Mac have taken $187.5 billion in U.S. aid since they were placed in a government conservatorship in 2008 after losses on investments in risky loans almost pushed them to insolvency. As the housing market rebounded, the two companies became profitable again, and they have returned $185.2 billion to the U.S. Treasury in the form of dividend payments for the taxpayer support.
Reporting by Margaret Chadbourn; Editing by Stephen Powell