Four of the largest lenders in the U.S. are signed up for the Federal Housing Administration‘s Short Refi program, spurring applications upward even as Republican lawmakers try to terminate the initiative. The Department of Housing and Urban Development launched the $8 billion program in September. Participating lenders provide an FHA-insured mortgage if it and the investor agree to write off the unpaid principal balance of the original first-lien by at least 10%. HUD set aside $50 million in a fund to catch any losses on those loans. While FHA Commissioner David Stevens said in testimony last week 23 lenders signed up for the program. As of March 11, HUD received 387 applications and endorsed 89 cases, nearly double the amount from one week ago, a spokesperson told HousingWire Monday. While the entire list of lenders was not available, a HUD spokesperson did confirm Wells Fargo (WFC), Citigroup (C) and Ally Financial (GJM) are participating through pilot programs. A spokesman for JPMorgan Chase (JPM) said the bank was participating as well, but said it would not disclose how many loans it would target with the program. The House of Representatives voted last week to end FHA Short Refi six months after its launch. It’s part of a recent campaign to end several foreclosure prevention and mortgage relief programs such as the Home Affordable Modification Program, the Neighborhood Stabilization Program, and HUD’s Emergency Homeowner Loan Program. Republicans say the U.S. can no longer afford such subsidies for homeowners and their lenders through programs that deemed ineffective. When the House voted, the FHA Short Refi program had only logged 44 applications. “The money from this program doesn’t go to the homeowner, it goes to the lender, it goes to the banks. And who pays for it? The taxpayers and ultimately our children and grandchildren because the federal government borrows 42 cents of every dollar it spends,” said House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.). “This program is already allocated $50 million and has helped only 44 people. Do the math.” Democrats do acknowledge the programs, in particular HAMP, underwhelmed many, but they would rather see adjustments rather than terminations. Stevens last week defended the FHA Short Refi program in testimony. “Although the number of loans endorsed to date is relatively low, the offering has only been available for a few months while systems and operational infrastructure must often be developed to utilize this option, in addition to the significant coordination required throughout the mortgage chain,” Stevens said. Write to Jon Prior. Follow him on Twitter: @JonAPrior
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