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Firm Says Congress Unlikely to Expand Mortgage Programs

Coinciding with Wednesday's ""House committee hearing"":http://dsnews.comarticles/fha-housing-market-friend-or-foe-2013-02-06 on the ""Federal Housing Administration"":http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration (FHA), ""Keefe, Bruyette & Woods,"":http://www.kbw.com/ a boutique investment firm, released its predictions of what actions the government is and is not likely to take to further assist the housing market.


Generally speaking, ""any large program expansions which require congressional approval are, in our view, not likely to go far,"" said Brian Gardner, SVP of Washington research at Keefe, Bruyette & Woods.

The government's two flagship housing programs introduced in 2009, the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP) are set to expire at the end of this year.

HAMP and HARP have assisted 1.4 million and 1.8 million homeowners, respectively.


President Obama has already expressed his support for expanding government refinance programs, but thus far Congress has resisted.

Obama proposed expanding access to refinancing through FHA, a program that would draw funding through a tax on banks. He also proposed a program to allow borrowers whose loans are not backed by Fannie Mae or Freddie Mac to refinance through the GSEs.

Both programs required congressional approval, and both programs were denied.

Gardner suggested FHA's current financial state ""makes it almost impossible politically that it would be a vehicle for any mass-refi program."" However, Gardner does not anticipate the FHA will require a draw from Treasury this year.

Sens. Barbara Boxer (D-California) and Bob Menendez (D-New Jersey) introduced the Responsible Homeownership Refinancing Act to extend HARP for one year and expand eligibility. The bill was held up in Congress last year, but Gardner believes the senators will push for its passage again this year.

""While we think there is a modest chance that Menendez-Boxer may pass the Senate, we think chances of the bill passing the House are quite low,"" Gardner stated.

According to Gardner, housing market assistance measures that can be passed without congressional approval have the best chances of being implemented.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.

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