Last week I testified before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity to discuss how the Federal Housing Administration’s (FHA) Short Refinance Option will help the housing market recover from the economic crisis. The following day, the committee voted to eliminate the FHA’s Short Refinance Option.
Home values across the country have fallen significantly during the Great Recession. Ending FHA’s short refi program would be detrimental to responsible homeowners across the country with good credit scores who owe more than their homes are worth. It also damages communities in states like California and Florida, where foreclosures have taken a massive toll on home values, causing neighboring home values to plummet, putting many homeowners into being “underwater.”
This is not the time to cut back on programs that may help homeowners stay in their homes. The short refi program is now underway and needs time to ramp up. Already, we are seeing an increased participation from lenders. As of mid-February, numerous institutions have opted to participate including Citi, Wells Fargo and GMAC/Ally. These institutions are aware that they will bear the majority of the costs for this program.
If we cut this program now before it has a chance to gain momentum, what are we saying to the American people?
Our message needs to be clear. We are committed to improving the housing market. We are committed to seeing this program through. And we are committed to doing our part to improve the economy.