Homeowner Affordability and Stability Plan (HASP): Preliminary observations of its impact on mortgage servicers
On February 18, 2009, President Obama unveiled the Homeowner Affordability and Stability Plan (HASP). The plan is a $275 billion initiative designed to prevent home foreclosures and help people stay in their homes by stemming the rising tide of defaults and delinquencies, and providing opportunities for consumers who have been unable to benefit from declining mortgage rates because of high loan-to-value (LTV) ratios. The plan applies only to mortgages on owner-occupied primary residences.The three key components of the plan are:
- A refinancing program for borrowers with little to no equity in their homes.
- A $75 billion program to reduce borrower monthly mortgage payments through standardized loan modifications.
- As much as $200 billion in additional capital for government-sponsored entities (GSE) Fannie Mae and Freddie Mac through additional preferred stock purchases by the US Treasury to help lower mortgage rates and increase lending.
The plan's effectiveness and impact on mortgage bankers will depend on its details (to be announced) and how it is executed. Our point-of-view document discusses the plan's key components and the mortgage origination and servicing areas we anticipate to be affected.