The Obama administration is discussing a massive refinance plan to help millions of homeowners refinance at today's historically low rates and avoid foreclosures, The New York Times reported this week.
Wait, wasn't that what HARP was supposed to have done when the government launched it in 2009? HARP, the Home Affordable Refinance Program, was designed to help borrowers who owe more than what their houses are worth refinance at a lower rate, so they could afford to keep their homes. But as you probably know by now, the plan was a disaster.
I guess the government has finally realized HARP failed and is ready to give it another try at solving the foreclosure crisis.
But don't get your hopes up yet. The Times reports that administration officials are considering a range of proposals, but the plans described in the story are vague and it appears they are in early stages of discussion.
"Exactly how a refinance plan would work is still under discussion," the Times reports.
One of the proposed plans would allow homeowners with mortgages owned by Fannie Mae and Freddie Mac to refinance their mortgages at 4 percent interest, according to the story.
Whether Fannie and Freddie are going to go for that is another question. Contrary to what some think, the agencies are not legally controlled by the Obama administration. Yes, Fannie and Freddie have used more than $170 billion in taxpayer money to stay afloat, but they are controlled by the an independent agency, the Federal Housing Finance Agency.
And the FHFA, which is led by acting director Edward DeMarco, will not support any massive refinance plans.
As much as I want to believe there is rescue on the way for borrowers, I can't help but think this is just another political game as we approach the 2012 elections.