The Raft for an Underwater Housing Market
There are an estimated 277,725 Minnesota home mortgages “underwater,” in which more is owned than the current market value of the property, that are eligible for refinancing under the so-called HARP 2.0 federal re-fi program that is set to expire next year.
Using research from the Paul Milstein Center for Real Estate at Columbia University, the Rebuild the Dream coalition says refinancing under the federal program would lead to $3,184 in annual savings for these homeowner families. That would lead to nearly $884.2 million in total annual savings for Minnesota households.
Next door in Wisconsin, the Columbia data suggests 171,875 mortgages are eligible for refinancing under the program. That would produce an estimated $2,935 in average savings for families, for a total annual savings in the state of nearly $504.5 million.
At least 1 million more U.S. homeowners come under eligibility rules of the revamped Home Affordable Refinance Program, called HARP 2.0 in banking circles, that was retooled last October by the Obama administration. Reuters reported July 16 that the program helped 1.3 million homeowners by May this year, a fraction of the potential homes. California alone has more than 1.3 million homes that potentially qualify.
HARP was credited with being responsible for 20 percent of the refinancing that occurred in May, the news agency said.
Such relief keeps people in their homes, reduces further downward pressure on the housing market and home prices, and makes substantial amounts of family incomes available to support and stimulate the broader economy.
Evidence shows the program is working, and should be extended. But what’s good for the country – and Minnesota, for that matter – fails to move Congress in an election year. Rebuild the Dream is worried that extending the program will fail if the Senate doesn’t act before members head home for the August congressional recess.
Here's a link to a state-by-state eligibility chart; click on the third bullet point, titled: Estimates: Benefits from Refinancing by State and Congressional District.
That spreadsheet shows congressional districts in Minnesota that have large numbers of exurban developments and homes underwater are the potential biggest beneficiaries from extending the program. The 2nd District has 5,154 homes eligible, the 3rd District has 50,570 homes ripe for the re-fi program, and the 6th District has 50,361 underwater mortgages considered eligible.