In the latest sign that Washington has been behind the curve on this housing crisis, the FHFA announced today that they are finally changing their original refinance blueprint (Home Affordable Refinance Program, HARP) and are now authorizing Fannie Mae and Freddie Mac to include refinance LTV's of up to 125%, up from the 105% that the original plan had been based on.
This action is a result of the plan's initial failure in recognizing just how many homes are actually underwater and were unable to qualify for the 105% LTV.
According to Moody's, there is an estimated 15.4 million homes that are worth less than what is owed.
This number is only going to continue to grow as a result of the ongoing supply and demand imbalance for real estate.
It is these types of economic lapses by the Obama administration that continue to be a drag on the housing market and broader economy. Washington simply does not understand the gravity of the situation. From the banking system, to the housing market, to the economy and the "stimulus" package, the Obama administration continues to undershoot.