When housing stimulus doesn't stimulate

The government's jump start of the housing industry doesn't seem to be as electrifying as planned:

The Mortgage Bankers Association today lowered its forecast of mortgage originations in 2009 to $2.03 trillion, a drop of over $700 billion from its March forecast.  $84 billion of the drop is due to lower purchase originations and the rest is due to lower rate/term refinancings and very low volumes in the Fannie Mae and Freddie Mac Home Affordable Refinance Program (HARP).  MBA is now forecasting $737 billion in purchase originations and $1,297 billion in refinance originations

The March increase in refinance originations was driven by two factors. The first factor was the drop in interest rates. The subsequent increase in interest rates, however, began to choke off the refinance wave in May, much earlier than anticipated in the March forecast. The second factor was the large volume of loans expected from HARP. While generally accepted estimates were that around 1.5 to 2 million borrowers might avail themselves of this program, with many more potentially eligible, to date only about 13,000 loans have been completed according to press reports.

On the other hand, the banks are dragging their feet on this government-guaranteed refinancing. We made a call to our own bank and were told that refinancing through the "Obama plan" could take 6 months.

They clearly aimed to discourage us. For without as much as taking a breath, they pressured us to sign up for less generous traditional refinancing with all the lucrative closing costs attached.

More here

Comments

[Jay Miller]

After working in the mortgage industry for 20 years with mortgagerefinancing.com. I think that the federal government has missed the boat on these programs. We have so many vacant homes that they should really be establishing programs that assist new home buyers. This will take these homes off of banks balance sheets and help stimulate property values.

[DUH]

to Jay:
It doesn't matter how lucrative or enticing the packages can or might be, even new home buyers cannot buy if they have NO JOB from which to pay the darn mortgage....duh!

[Paradigm Shift]

The public sector only has plans to triage not stimulate .. stimulus implies growth.

This failing housing program reminds me of the cash for clunkers joke.. take the market of people who are driving clunkers and encourage them to buy a new car they can't afford by taking out a loan 3X the $4,500 voucher amount. Winners? Government Motors (GM), Banks, and UAW. Losers? Those 40% that actually pay taxes after the clunker crowd default on their loans.

[Fuzzy Bear]

The consumer is tapped out and in fear of losing their jobs. That is the main issue.

[bob sr]

Please, the real story never printed. The fact is that many who have the $$$ and credit can't even get qualified. Yes and they are approved first. Refinace,project Hope, Hud, County money, Stabilization Programs really? How about first time buyer programs, foreclosure help, really. The truth and it is there as fact, it is better to boot people, play the game, get the bailout money and write off's and hope someone from offshore will buy and whne they can't rent start the process all over again. Just go down the list and write to it, charade after charade by fact. A fact that few have the courage to report on. Sorry and that is reality.