Determined to increase participation rates in the Home Affordable Refinance Program (HARP), the Federal Housing Finance Agency (FHFA) will hold a special town hall-style meeting at the Woodson Regional Library in Chicago on July 8 to discuss the benefits of the program and encourage the approximately 36,000 Chicago residents who are eligible for the program to participate.
This will be the first of several town hall-styled events that the FHFA will hold in the upcoming months.Â
Mel Watt, the new director of the FHFA, is scheduled to attend and will participate in a special panel discussion, moderated by Sandra Thompson, deputy director for housing mission and goals for the FHFA, also featuring officials from Fannie Mae, Freddie Mac, Wells Fargo and a community leader from Neighborhood Housing Services of Chicago Inc. What's more, attendees of the event will receive materials explaining the program in detail – including information specific to Chicago.
In May, FHFA reported that about 77,000 applications for HARP had been processed in the first quarter – far short of the agency's goals. It was the fourth straight quarter in which HARP refinances declined – however, it should be emphasized that the home refinance volume is down across the board.
Overall, HARP participation rates have fallen far short of government expectations since the program was launched in 2009. Originally, the FHFA had forecast that 4 million to 5 million borrowers would take advantage of the program; however, problems with its design, combined with rising interest rates, resulted in lower participation than had been anticipated.
In response, the FHFA, along with government-sponsored enterprises Fannie Mae and Freddie Mac and other industry stakeholders, identified several issues that were deterring homeowners from using the program, including the fact that loans with loan-to-value (LTV) ratios greater than 125% were not eligible for HARP refinances and that the program's short duration (approximately 15 months) was discouraging lenders from participating.
After soliciting feedback from stakeholders, many of the problems with HARP were addressed, compromises were made and in October 2011, a re-branded program, ‘HARP 2.0,’ was launched. Changes included removing the 125% LTV ceiling and extending the duration of the program to Dec. 31, 2015.
Participation, however, continued to fall short of expectations. As of the first quarter, there were about 750,000 borrowers who could benefit from the program but who had not yet refinanced, according to the FHFA.
The town hall-style events are part of a nationwide public awareness campaign announced last year. The events are being held in ‘targeted cities’ that have the highest number of ‘in-the-money’ borrowers who have yet to take advantage of a HARP refinance, FHFA says.
‘We know that there are hundreds of thousands of borrowers who can still benefit from HARP and are essentially leaving money on the table by not taking advantage of the program,’ Watt said in a statement in May. ‘By engaging directly with local community leaders, faith-based organizations, local elected officials and lenders, our goal is to leverage these trusted sources to reach as many 'in-the-money' borrowers as we can.’