Even as the White House unveils a "New" plan to refinance underwater borrowers (which is just a revised version of HARP), its own administration is creating barriers to housing and mortgage recovery. An article in the Financial Times shows how these "pro-cyclical" policies do more to make things worse than they do to improve them.
|Effort||Postive Intention||Actual Negative Effect|
|Home Affordable Refinance (HARP)||Help Underwater Borrowers refinance||Requires lenders to take responsibility for previous errors in the old mortgage they are refinancing|
|FHFA Reform||Rescue FNMA/FHLMC Stimulate more lending||Initiating lawsuits against lenders, Forcing lenders to buy back loans originated before the crisis|
|Increase FHA Lending||Stimulate home purchase||Reduced maximum loan amounts, increased audits, fines and penalties on lenders using the program|
|Improve Secondary Market||Qualified Residential Mortgage will reduce lender liability and amount of risk retained||No one knows what a QRM is - no private secondary market exists|
|Dodd-Frank||Rid Market of Predatory Lending||Rid Market of 600,000 loan originators, created uncertainty in every segment of market|
|RESPA Reform||Transparency in lending costs||$800,000,000 in additional fees for homebuyers and borrowers|