The government's Home Affordable Refinance Program and Home Affordable Modification Program will be extended until the end of 2016, according to an announcement from FHFA Director Mel Watt on Friday. Speaking at the Greenlining Institute 22nd Annual Economic Summit, Watt announced the one-year extension of the government's two affordable housing programs, which began in 2009 in response to the housing crisis. Both programs were set to expire at the end of 2015.
The participation rates for both programs have on the decline, partly because many borrowers are already participating in one program or the other, and partly because of recovering house prices, Watt said, but lenders and servicers continue to approve modifications through HAMP and refinances through HARP. Watt said that this will be the final extension for FHFA's participation in HAMP and he anticipates that this will be the final extension for HARP, adding that neither program was intended to be permanent.
A recent research paper on the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 prepared by Washington, D.C.-based non-profit think tank American Action Forum President Douglas Holtz-Eakin, former director of the Congressional Budget Office, estimates that the burden of compliance costs on the banking sector will result in a reduction of nearly $900 billion in gross domestic product and a cost of about $334.60 per year for a working-age person over the next decade.