HARP 3.0 Discussions Reveal Little Hope for HARP Update

By Stevie Duffin Updated on 4/30/2013

By Daniel Duffield

Recently, mortgage professionals convened with White House representatives to deliberate on the status of housing and the mortgage industry, and during this meeting, experts retouched upon the possibility of initializing HARP 3.0, the third incarnation of the Home Affordable Refinance Program.

Specifically, the Obama Administration has applied some pressure to get this program up and running, a program which analysts at Compass Point Research & Trading have suggested would allow the refinance of private loans through the government sponsored enterprises Fannie Mae and Freddie Mac.

While the release of HARP 3.0 is far from certain, the administration has been discussing a potential change in the cutoff date for HARP eligibility, according to Inside Mortgage Finance. Despite this, Compass Point economists assert that the two issues are separate and will be handled as such.

According to Isaac Boltansky, Kevin Barker, and Jason Stewart of Compass Point, there is reasonable doubt as to whether the White House intends to push for either the upgrading of the HARP program or the amending of the eligibility cutoff.

In addition, although the White House will most likely express support for the efforts to increase the range of eligible HARP borrowers, Compass Point expects that such support will be artificial as the result of political necessity, rather than in genuine interest.

Sarah Hu, financial analyst of the Royal Bank of Scotland, said that although some speculation has been circulating about the release of HARP 3.0, there has not been a widespread push for its creation, stating that due to the political opposition to its passing, HARP 3.0 does not seem to be getting a release anytime soon at this point in time.

Similarly, Jeana Curro of RBS noted that in order to enact the update to HARP that would allow non-GSE underwater borrowers access to a refinance, Congress would have to revise the current GSE charger, making it particularly unlikely.

To better ease the transition into HARP 3.0, Compass Point evaluated whether moving back the HARP eligibility cutoff date one year or removing the date entirely would help matters. According to analysts, "If the HARP eligibility date were to be pushed back by one year to May 2010, we estimate that between $27 billion and $43 billion in unpaid principal balance of mortgage debt could be re-HARPed.”