HARP II, Either A Huge Deal Or Not

I’ve been trying to assess the likely impact of today’s announcement of a stepped-up mortgage refinancing plan and people seem to be all over the map. The announcement comes from the Federal Housing Finance Agency, which is, of course, part of the federal government. But it’s an independent agency and its head, Edward DeMarco, hasn’t always been on great terms with the Obama administration, so we should see there as being some distance between this proposal and the White House. The FHFA itself is actually not making any particularly grand claims on behalf of this initiative, and other people I’ve heard from in the government are likewise being very restrained and not promising any gigantic macroeconomic benefits.

Sarah Rosen Wartell, who leads the housing work at CAP, put out a statement observing that “some important details are still to come that will determine how much progress will be achieved.” Joe Gagnon goes really big, and says that if this is designed right we could get three to four million jobs out of it which obviously would be a huge effect. By contrast, Felix Salmon says he thinks this will do almost nothing. Personally, I have no idea who’s right about this. It can’t hurt to try, right?