WASHINGTON (AP) — The Obama administration is extending for another year a program aimed at helping people struggling to avoid foreclosure on their homes, Treasury Secretary Jacob Lew said Thursday.
He said the administration is also expanding an effort to increase access to affordable rental housing. In addition, it is launching an effort to revive the portion of the mortgage market backed by private industry.
"Families and neighborhoods across the country continue to recover from the financial crisis and we must not lose our resolve to help them," Lew said at a conference marking the fifth anniversary of the government's mortgage program.
Lew said the Home Affordable Modification Program had provided relief to more than 1.3 million homeowners who have been able to permanently modify their mortgages, saving them $540 per month on average in their mortgage payments. He said the extension of the program would last at least until Dec. 31, 2016, allowing the administration to continue assisting homeowners facing foreclosure and those whose homes are "under water," with mortgages larger than the current value of the home.
Lew said that the government's mortgage-support efforts had served as a model for the mortgage industry on how to restructure loans and help homeowners.
He said the Treasury Department and the Department of Housing and Urban Development are joining efforts to support financing of FHA-insured mortgages for construction and renovation of rental housing. He said the first effort would help restore affordable housing damaged by Superstorm Sandy in Far Rockaway, New York. Officials said the program would boost construction and renovation of apartment projects by significantly reducing the interest rates charged on the projects.
In a further effort to expand access to mortgages for prospective homeowners, Lew said Treasury was launching an effort to revive the private-label securities market. Prior to the housing crisis, private-label securities provided mortgages for many qualified borrowers who did not meet eligibility requirements by government-sponsored enterprises such as Fannie Mae and Freddie Mac.
Lew said Treasury would seek suggestions on ways the government can encourage private investors to return to the mortgage market and would host a series of meetings with investors and securitizers on the issue.