The same day the Washington Post published an unflattering investigation into Obama’s ineffective housing programs, the president announced he will bypass Congress to revamp the government’s mortgage-refinancing program. It’s interesting timing, to say the least:
With recovery in the housing market tied to economic recovery, Obama will today announce what senior officials are calling a “major overhaul” of the government’s underused refinance program for federally guaranteed mortgages, in order to aid homeowners having difficult refinancing their housing loan.
The initiative will open up the government’s Home Affordable Refinance Program (HARP) to homeowners who didn’t previously qualify. Under the old rules, homeowners had to owe less than 125 percent of the value of their house.
The new rules are an attempt to reach Americans whose homes have lost significant value during the past few years. But analysts are skeptical that the changes will have a notable impact:
But analysts pointed to the relaxed stipulation of an eligible HARP borrower having not missed a payment in the last six months nor more than one in the last year. Chase analysts said this change would add only 3 percent to 5 percent more possible borrowers to the program.
Considering the nominal number of homeowners the administration has been able to help so far, the effect of Obama’s plan seems negligible. The Washington Post reported today that “[t]o date, administration programs have permanently reduced the debt of just one tenth of 1 percent of underwater borrowers.”
Then there are reports of a politically-charged conference call the administration had with reporters this morning, which makes it seem like campaigning – not good policy – was the driver behind this. Times’ Massimo Calabresi writes:
The last explanation for the program’s limits is a more cynical one. It is designed to help just enough people to claim movement on the issue, but not to do the politically challenging work of actually resolving the larger threat housing poses to the economy. The reason for doing the bare minimum: to give Obama a political weapon against Republicans in 2012.
As with most of the Obama administration’s proposals this fall, it all boils down to partisan politics.