Throughout the coming weeks of sport and competition, keep in mind the cost Rio and Brazil are bearing to host us. More than 77,000 citizens have been forced from their homes and communities and placed in public housing far out on the peripheries. Many can’t afford their new rent.

Since 2009, “Pacification” forces have been deployed throughout many of Rio’s working-class communities, (paradoxically) killing 307 residents in 2015 alone  — the majority young, black men. A “shoot first, ask later” attitude matched with virtual impunity has lead to the deaths of children by stray bullets, innocent youth by prejudice and suspicion, and a retaliatory spike in violence and crime (followed by a 103% increase in police killings only recently). An involved property developer was quoted admitting the “pacification” strategy was really one of deliberate isolation, designed to hide the squalor and disarray working-poor communities are subjected to not by gangs, but by the government. His goal, he said, was to make Rio, or at least give the impression of, “a city of the elite.”

Very few plans for improvements in these communities that helped win Rio the games in 2009 were implemented. The single metro line that was completed only reaches the most affluent areas, and bus lines have been changed to avoid poorer areas. Some of those areas have been literally walled-off from highways and travel routes. Rio legislation requires community participation in budgeting, yet the community as a whole has been left in every meaning of disregard. The internationally-lauded family financial assistance program that helped raise 50 million Brazilians into the middle class over the last decade recently ran out of funding. Schools and hospitals have seen funding cut and even been closed over and over while politicians and elite public servants raise their salaries and ignore the constitution (well, at least they’re working to change that so their activities wouldn’t be illegal…). Even the police and other first responders, who are clearly playing such a central role in this event, went without pay because of shameless corruption and mismanagement on the city and state levels.

On the Federal level, President since 2010 Dilma Rousseff was ousted several months ago amid the largest corruption scandal in Brazilian history on accusations of accounting tricks in order to clean up her record for reelection. The Senate investigative committee, full of those who voted to impeach her, found no evidence at all of the crime. More than half of those in Congress who voted to impeach her, however, are implicated and/or convicted in the multibillion dollar scandal, among others (of course). Several recorded conversations have been leaked revealing that the motivation behind impeachment is killing the investigation. The former-Speaker of the House Eduardo Cunha, who championed and prioritized her impeachment process over the past year, was found guilty of multiple counts of corruption and stripped of his title (though not his perks, unlike Dilma). Current President and former-Vice President Michel Temer — who is also implicated in the ongoing scandal — operated very closely with Cunha to drive the effort for impeachment, promising cabinet offices to leaders of major parties to draw support. Within three weeks, three cabinet ministers in Temer’s all white, all male, all millionaire cabinet had resigned facing corruption charges (including, ironically, the anti-corruption minister). REMINDER THAT HIS PREDECESSOR DILMA WAS THE COUNTRY’S FIRST FEMALE PRESIDENT.

This so-called “soft coup” by the pragmatic corporatist party of Temer, Cunha, and Rio’s mayor — Eduardo Paes — has been fueled in large part by the country’s mass-media, who have a history of supporting conservative coups. For instance, when paper Folha de São Paulo polled Brazilians on their thoughts on Dilma vs. Temer, Folha published results construed to show that the majority of the country wanted Temer to remain president until the end of the term. In reality, originally unreleased data implied that a clear majority still wanted new elections. Domestic media as a whole are now suggesting Temer run for reelection in 2018, though he is legally banned from doing so for violating campaign finance laws in his last personal campaign. Other media have downplayed anti-Temer protests and highlighted and even exaggerated anti-Dilma acts, while offering mostly pro-impeachment commentators on air and in print.

Though most Brazilians did and do support Dilma’s impeachment for her lack of charisma along with her being head of government during a major scandal, just as many or more did and do not want Temer as president (he received a shockingly low 1% of the vote in a presidential poll only months ago). He’s less popular now than Dilma at her worst. Yet, he, unlike Dilma, refuses to entertain the notion of new elections. With no vote or other input by the nation, he is pushing major “reforms” with a huge swing to the right from the previously social-democratic government, privatizing the nation’s resources and slashing any and all social programs (in order to please “Goldman, Sachs and the IMF” and his adoring foreign investors — those with no investment whatsoever in the country or people, only in making money), while simultaneously increasing the salaries of the judges who will vote on whether to proceed with Dilma’s impeachment and whether or not to indict he and those in his party and new coalition. That coalition heavily features the right-wing party who has lost four consecutive elections to Dilma’s center-left party.

Clearly, there is quite a bit for Brazilians to be angry about, so please — POR FAVOR — cut them some slack over the next few weeks. They, like most of us, would prefer to continue to be able to go to school and to get an ambulance in under 5 hours. Keep them and their struggles in sight and in mind. An investment of your patience, attention, and empathy will go a long way to finally grant the longtime “Country of the Future” its rightful place as a country of today.

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Many of us in progressive circles pride ourselves on being a diverse, tolerant, and accepting group. And we are. It’s not hard to see how that plays out in politics, with the GOP constantly struggling for relevancy among minorities, not usually an issue for Democrats. Thanks to Dustin Cable at the University of Virginia’s Weldon Cooper Center for Public Service, now we can see how our cosmopolitan attitude affects us–or not–geographically. The results are stunning.

A new and interesting map based on 2010 census data shows every single person in America as a colored dot. Blue dots represent caucasians, green represents blacks, red represents Asians, orange represents Hispanics, and brown represents “other”, which can mean Native American and people of more than one race.

Looking at the map, it appears there are large metropolitan areas of diversity. Here is what the St. Louis area looks like:

It looks pretty segregated, even at a distance. Zooming in provides us with a clearer picture, often much more segregated than first glance. Here we can see how individual neighborhoods look:

Where are you on the racial dot map? Is your neighborhood diverse or largely segregated?

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If you’re interested in architecture and have ever considered the role architectural design plays in advancing a progressive social agenda, now is the time to sit up and take notice of a new breed of designer.

The focus of this new breed is neither abstract nor theoretical. Their designs are less about them and more about the people who are the ultimate users. They work primarily in the Third World and in underdeveloped nations where the needs are great, and small-scale solutions yield large-scale impact.

They’re listeners and collaborators shaping modestly scaled design solutions to specific social needs. They’re problem solvers and innovators who respect and celebrate local context. They’re users of hyper-local vocabulary and sustainable, indigenous building materials. Theirs is a humanitarian commitment employing the practical tools of their trade.

If you look, you’re not going to find their faces plastered on the covers of trendy shelter magazines; but the homes, shelters, hospitals, and schools they design and build and their impact on needy communities is profound.  They are everything the self-aggrandizing celebrity architect is not.

This new direction is inspiring youthful architects in countries around the world. Two design studios, TYIN tegnestue Architects, based in Trondheim, Norway, and MASS Design Group of Boston are only two of many that are committing themselves and their skills to promote social change.

 Design rooted in context

In 2012 Andreas G. Gjertsen and Yashar Hanstad of TYIN tegnestue Architects were awarded the European Prize for Architecture. The award recognized the architects’ work designing and building shelters and community centers inspired by the vernacular of local communities in poor and undeveloped areas in Thailand, Uganda, Sumatra, Indonesia, and Norway.

The prize gave international prominence to the architects’ vision of “serving a purpose” and designing and building architecture “that follows necessity.”  Jointly awarded by The Chicago Athenaeum: Museum of Architecture and Design and The European Centre for Architecture Art Design and Urban Studies, the prize is the highest honor awarded to European architects “who have demonstrated a significant contribution to humanity and to the built environment.”

Expressing his hope that other architects might follow the example of the Norwegians, Christian Markiewicz-Laine, museum president of The Chicago Athenaeum, explained that “such selfless pursuits in helping other nations solve the difficult problems of their environment, their ecology, their economic hardship, while building and supporting local communities  . . . are the most important direction of our future architecture today.”

Similar in their humanistic approach and commitment to social problem solving are Boston-based Michael Murphy and Alan Ricks of MASS Design Group.

 Improving health and education through design

While still in graduate school, Michael Murphy happened upon a lecture by Dr. Paul Farmer, founder of Partners in Health. Intrigued by Dr. Farmer’s work in delivering healthcare to underserved communities in war-torn Africa, Murphy was surprised to discover that Dr. Farmer had been building hospitals and clinics without the expertise or collaboration of an architect.

Murphy and Ricks found their calling when they began working with Dr. Farmer to bring a creative, design-based approach to re-conceptualizing a hospital and, later, a school in Rwanda. Today, the designers of the MASS Design Group hope that their success in improving people’s live will serve as “an example for how designers can rethink their role in the world.”

If you want to be truly inspired, as I was, take a look at the video below and see for yourself what can happen when need and design meet and socially committed designers go to work.

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Several weeks ago, I  wrote about the hazard of being seen as a hero. The downfalls of General David Petraeus and Lance Armstrong demonstrate this idea  quite clearly.

As Newark, NJ Mayor Cory Booker ponders whether to run in 2014 against Governor Chris Christie or Senator Frank Lautenberg, he is seen by most of the nation as a model leader who governs an efficient and clean city, while being a model citizen who personally comes to the assistance of victims of natural disasters and crime. However, as Kate Zernike of the New York Times reports, for all of his accomplishments, after six years in office there are still significant problems in Newark.

For example, she points out:

When snow blanketed this city two Christmases ago, Mayor Cory A. Booker was celebrated around the nation for personally shoveling out residents who had appealed for help on Twitter. But his administration was also scorned as streets remained impassable for days because the city had no contract for snow removal.

Additionally, she reports:

In recent days, Mr. Booker has made the rounds of the national media with his pledge to live on food stamps for a week. But his constituents do not need to be reminded that six years after the mayor came into office vowing to make Newark a “model of urban transformation,” their city remains an emblem of poverty.

It would be ludicrous and unrealistic to expect Cory Booker or anyone else to be able to clean up all the troubles in Newark. This city has been so troubled that it is sometimes referred to as “the armpit of the nation.” In 1967, a race riot resulted in twenty-six deaths. Schools are still wanting; the air is highly polluted, and considerable improvements are needed in the infrastructure.

Like all of us, Booker is confronted with the conflict between substance and image. It is the hope of virtually everyone to accomplish a great deal and to be recognized for having done so. If a person achieves a great deal without blowing her horn, she is considered modest or even withdrawn. That is acceptable, although some feel that it would be best to have others recognize genuine achievements, if for no other reason than to have a little more faith in human beings. If a person’s image surpasses the substance of her accomplishments, problems arise because she is seen as vain and self-promoting.

Booker’s performance is further described by Ms. Zernike:

A Stanford- and Yale-educated son of the suburbs, Mr. Booker arrived to suspicion when he moved into the Newark projects and made his unsuccessful first run for mayor. Lately, though, criticism has come even from those he won over: people working on the education projects he supports, council members who ran on his reform slate, business leaders and families who believed in his promise to bring “a renaissance for the rest of us” to a city plagued by self-dealing and mismanagement.

They say Mr. Booker’s frequent Twitter posts to his 1.3 million followers, his appearances on television and at gatherings of moguls and celebrities — he was out of town nearly a quarter of the time between January 2011 and June 2012, according to The Star-Ledger — have distracted him from the local trench work needed to push his agenda. Business leaders say he dazzles at news conferences, but flags on the follow-through. Residents have wearied of the outside fascination for the mayor whom Oprah Winfrey called “a rock star” and Jon Stewart on Wednesday referred to as “the superhero mayor of Newark.

One of the problems with our political system is that the demands of increasing awareness  and of raising money to run to office make it difficult for incumbents to do their day jobs. If Booker wants to become the next governor of or senator from New Jersey, he must tweet his accomplishments and make the rounds of the television circuit. He’s not alone in this regard. President Barack Obama could only spend a minimal amount of time at the White House while he was running for reelection in 2012. When he first ran in 2008, he spent only165 days in his Senate office as he planned and implemented his strategy to become president. That same year, John McCain was away from his “day job”s as he battled through primaries and into the general election.

What is most important for Cory Booker is to have a clear sense of self-realization. He has created a high bar for himself,  in being the working mayor of Newark and in letting the public know of his accomplishments. It is fair to argue that he can do more for the country as a governor or senator, and perhaps ultimately as a president by cultivating a highly visible public persona.  Unfortunately, until we adopt an electoral system such as England’s, in which campaigns are short (about three weeks) and inexpensive (very limited television advertisement allowed), we will have many candidates not tending to their day jobs.  If Booker recognizes the this reality, then the criticism of Ms. Zernike in the Times becomes somewhat moot. He is doing the best  he can. But if he becomes too enamored with himself, then he may well follow the misfortunes of Petraeus and Armstrong. Let’s hope that he makes discretion the better part of valor.

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Shortly after assuming the presidency following the assassination of President John F. Kennedy, Lyndon Johnson announced his commitment to a war on poverty. That was the unofficial name of legislation first introduced by Johnson in his State of the Union address on January 8, 1964.

In the  2012 presidential election, the code word for equality was “middle class.” Certainly the middle class has been and still is in need of economic support from the government as well as from the wealthy households that are making more than a quarter of a million dollars each year. President Obama has been consistent in standing by his pledge that federal income taxes for the wealthy be raised from 35% to 39.6%.

Those in the middle class are generally active voters who were committed to maintaining the limited wealth that they have accumulated and retaining jobs that allow them to garner each year at least a livable wage or more. It is important for every politician who wants to win his or her race to focus the campaign toward the needs of the middle class. Republicans also try to appeal to the middle class, even though their policies generally favor the wealthy, at the expense of the middle class and the poor.

Lyndon Johnson grew up poor along the Pedernales River in central Texas. He experienced the rugged chores of farming as his family struggled to make ends meet. He also went from town to town peddling various wares. In 1926, Johnson enrolled in Southwest Teachers College. from which he graduated,  and then found a job teaching in a one-room school house. This was obviously quite a difference from Mitt Romney, whom you might remember as the most recent Republican candidate for president.

While Barack Obama did not grow up as poor as LBJ, he clearly was aware of the plight of those with little or no money, because of his three years as a community organizer in Chicago. Even though he directed most of his comments in the campaign toward helping the middle class, he never lost sight of the needs of the poor, who he came to know so well after college and in the years that followed. His concern for the poor goes beyond those in the United States; it is essential to his international strategy, in which he strives to eradicate poverty in developing countries. He believes that eliminating income inequality in poor countries around the world is an essential part of strengthening global stability and promoting peace. As Zachary A. Goldfarb reported in the November 23 edition of the Washington Post,

When Barack Obama published his autobiography, “Dreams From My Father,” about racial identity in 1995, he talked with his neighborhood newspaper in Illinois, the Hyde Park Citizen, about the economic disparities he had seen while exploring the world as a child and young adult.

“My travels made me sensitive to the plight of those without power and the issues of class and inequalities as it relates to wealth and power,” he said in that interview. “Anytime you have been overseas in these so-called third world countries, one thing you see is a vast disparity of wealth of those who are part of the power structure and those outside of it.”

Goldfarb goes on to say:

Obama’s actions as president provide a glimpse of how he views legislation as a means to his end. His health-care reform law, aimed at covering as many of the uninsured as possible, takes a shot at addressing income inequality by imposing new taxes on the wealthiest Americans. Beginning next year, upper-income earners will pay new surcharges that will result in an average additional tax bill of $20,000 for the top 1 percent.

The poverty rate in the United States has grown considerably in recent years. As Bloomberg Businessweek reports,

For half a decade, the percent of Americans living below the poverty line has increased each year, from 12.3 percent in 2006 to 15.1 percent in 2010. Today the Census Bureau released its analysis of U.S. poverty in 2011, and the official poverty rate essentially held at 15 percent, meaning that 46.2 million people live below the poverty line.

A recent Frontline program on PBS explored the plight of poor children in Iowa. As I watched it, I couldn’t help but wish that John Boehner, Eric Kantor, and Mitch McConnell had been in the same room as me. I would have been most interested in their response to this depiction of poverty. I would have wanted to think that they would have a cathartic moment and changed their policies to favor legislation to address the needs of the poor. However, my reality bone told me that in all likelihood they would have blamed the victims, the poor children of eastern Iowa, rather than support any action to improve their lives.

Most progressives hope that Barack Obama has a secret, and so far undisclosed set of policies, that he wants to propose and see enacted in his second term. These may include stricter gun control laws, a new stimulus package, and a quicker withdrawal from Afghanistan. If the president “wins” the battle over the so-called “fiscal cliff,” it would be refreshing and encouraging to have him advance more of a comprehensive policy toward meeting the needs of the poor. There is little doubt that he would support such a policy. The question is whether he thinks that it would be a battle that he could win. The key to this decision lies primarily in restoring a veto-proof majority in the Senate as well as a new majority in the House in the 2014 mid-term elections.

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The current conflict regarding FEMA (Federal Emergency Management Agency) is essentially about whether the federal government should have primary responsibility for addressing disasters, or whether the states, localities, and private organizations should handle these issues. If any disaster demonstrates why FEMA needs to continue to exist in its present form as a federal agency, Hurricane Sandy is it. This disaster hit a dozen states. All of them border at least one other state that was hit; they all have common needs in responding to the effects of the rain and wind. People in these states have all been without electricity, gasoline, essential food products and water. The number of families that are homeless along the New Jersey coast, on Staten Island, and on Long Island is well into the thousands.

Help has come from all over the country. The military, which is under the control of the federal government as opposed to the states, has delivered everything from heavy equipment to gasoline and water from a other areas. Huge C-17 and C-130 Hercules transport planes have flown in supplies from as far away as California. There is no way that each of the states that were hit by the hurricane could have fended for themselves, although Governor Romney has suggested that they should.

To better understand the recent states’-rights movement, we need to look back more than 40 years. In the mid and late 1960s, under the strong influence of President Lyndon Johnson, Congress passed civil rights bills that provide protection for minorities in issues such as voting rights, public accommodations, and fair housing. Southern Democrats (and there were a lot of them in the mid-1960s) and some Republicans opposed the civil rights movement. They viewed these laws were an encroachment of states’ rights. In reality, the states’ rights argument was just a cover to continue to discriminate against African-Americans and other minorities. In the 1968 elections, Republican Richard Nixon appealed to southern states to leave the Democratic Party and join him in the Republicans’ effort to support states’ rights. This point of view was further exploited by third party candidate George Wallace from Alabama.

By 1972, the South had basically flipped from Democrat to Republican. It has been that way ever since. What’s important to keep in mind is that the genesis of the southern migration from Democrat to Republican was the issue of states’ rights, a euphemism for racism. Over the past 40 years, the racism has continued to be an underlying motivation of the states’ rights movement. That’s why so many efforts towards voter suppression, primarily in northern states, have been directed towards making it more difficult for African-Americans, Hispanics, and other minorities to vote. Anything that can strengthen the states’ rights movement is favored by the mainstream of the Republican Party. These include the dismantling of FEMA, the voucherization of Medicare, the reduction of Medicaid funding, and a host of other programs. Presumably, the Republicans feel that they can advance their agendas more effectively at the state level. They’re probably right about that.

As Jared Bernstein wrote in a special report to the CNN website,

Neither we as individuals nor our cities or states can do it all ourselves. Imagine, as Mitt Romney has advocated, that FEMA were eliminated, privatized, or handed off to states in a block grant. Or consider the House Republican budget — authored by Rep. Paul Ryan and endorsed by Romney during the primaries — a proposal that would cut 22% from the part of the budget that supports this type of aid to the states, amounting to a loss of $28 billion in 2014, including a $2 billion cut in New York state alone.

Further imagine — and if you’ve been following the hundreds of thousands of state layoffs of key personnel in recent months, this shouldn’t be a stretch — that a disaster like Sandy occurred at a time when state budgets are already under great strain (as are many families’ budgets).

So, as you weigh the presumed advantages of farming out the responsibilities and resources of FEMA to the states, consider the recent origin of states’ rights. It has to do with racial discrimination. In reality, the movement goes back to the beginning of the settlement of America by Caucasians and the slaves from Africa that were forced into what became the Confederacy. The U.S. Constitution endorsed discrimination through the “three-fifths” clause, and eventually the Civil War was fought over the issue. What lies behind the 21^st Century Republican movement of states’ rights is what is sometimes called “America’s original sin.” From civil rights to FEMA, it’s important to strengthen the federal government, which is the real protector of our human rights and the general welfare of the country.

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Perhaps our banking crisis can be solved in part by borrowing a technique from the Affordable Health Care Act. The AHCA requires that all insurance companies allocate at least 80 percent of their revenue to direct benefits for policy-holders. Their overhead and profits can only come from the remaining 20 percent.

Why couldn’t a similar system be used with America’s banks? There has been considerable criticism that the TARP bailout was nothing more than a method for banks to replace lost losses that occurred due to ill-advised and in some cases illegal investments prior to 2008. Where the goal of most politicians and economists, and certainly the public in general, was for the banks to put their assets back into circulation to individuals, families, and small businesses, this hoped-for outcome has not happened.

Neil Barofsky, the former inspector general for TARP, has recently published a book simply called Bailout. He writes:

I now realize, though, that Treasury’s dismissal of our warnings has produced a valuable byproduct, the widespread anger that may contain the only hope for meaningful reform of our system. I now realize that the American people should lose faith in their government. They should deplore the captured politicians and regulators who took their taxpayer dollars and distributed them to the banks without insisting that they be accountable for how the bailout money was spent. They should be revolted by a financial system that rewards failure and protects the fortunes of those who drove the system to the point of collapse and will undoubtedly do so again. They should be enraged by the broken promises to Main Street and the unending protection of Wall Street. Because only with this appropriate and justified rage can we sow the seeds for the types of reform that will one day break our system free from the corrupting grasp of the megabanks.

Barofsky, a lawyer by training, spent most of his time as inspector general looking for legal violations by large banks, as well as accounting malfeasance. He found plenty of both. His remedy is greater oversight, with the Treasury Department, Congress, and the President putting more energy into ensuring that the banks do not sacrifice the American people at the expense of their own ill-earned profits.

One idea might be to ensure that banks use 80 percent of their assets, or at least their income, to directly help the American people. Barofsky points out that this is difficult to do because money is fungible, meaning that it is hard to trace. Does a loan to a small business come from the bank’s regular earnings or from aid that came from TARP? Is it possible that regulation to this degree might be so cumbersome that it would be more than either the regulators or banks could do.

Another option has been suggested by Ohio Congressman Dennis Kucinich. In his bill, HR 2990, he suggests an idea embraced by the American Monetary Institute. The core of the plan is to essentially neutralize banks by having the Federal Reserve Bank directly make money available to the federal government, rather than banks, for distribution. Thus, if money is needed to rebuild our infrastructure (which it obviously is), no money would go to banks but all would go to fund programs that would address the goal of repairing infrastructure. Money could go to the Department of Transportation or the Department of Housing and Urban Development to design, implement, and evaluate these programs. This directly puts money in the economy for positive purposes and stops banks from preventing directing money to where it is needed most.

Whether it would be the 80 percent plan or the American Monetary Institute plan, there are options to prevent banks from hoarding money, as health insurance companies have for years. We can only hope that our elected and appointed officials consider these ideas.

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Two recent surveys released by the U.S. Census Bureau and the Federal Reserve confirm that family net worth has taken a dramatic downturn in the recent recession. The survey’s findings shine a harsh light on the devastation inflicted by the reckless behavior of the financial industry in its manipulation of the housing market, and also explain why the country and families are struggling to recover.

The U.S. Census Bureau shows Gen X suffered greatest loss

According to the U.S. census report released on June 18, the annual Survey of Income and Program Participation, which takes a detailed look at the financial situation of all Americans, the median net worth decreased for all age groups between 2005 and 2010. (Net worth is the value of assets minus debt.) Those in the Gen X age group , now in who are now in their mid 40s to mid 50s, took the biggest hit in the economic downturn

For households in the 45 to 54 year old range, median net worth declined by $54,881 to $90, 434, or a 38 percent drop from 2005 to 2010, adjusted for 2010 dollars. For the entire population, the median household income declined by 35 percent, or $66, 740. According to Census Bureau economist Alfred Gottschalck, the overall decline in net worth is due to a decline in housing values and stock market losses.

A Federal Reserve survey shows record drop in net worth

Americans suffered a gut-wrenching decline in wealth between 2007 and 2010, according to the Federal Reserve Survey of Consumer Finances released on June 11. The Federal Reserve conducts the Survey of Consumer Finances every three years, so the latest numbers compare family finances in 2007 and 2010. The Fed reported a bigger drop in net worth than the Census Bureau, putting it at 38.8 during the three-year period. According to Fed economists, this was the biggest drop in net worth since 1989, when they began the survey.

According to the Fed survey, the median net worth plunged to $77,300 in 2010 from $126,400 in 2007. The 2010 levels were similar to those in 1992. Like the economists at the Census Bureau, the Fed economists blamed the decline on “a broad collapse in housing prices.”

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A lot of homeowners with underwater mortgages have March 17, 2012 circled on their calendars. That’s the day when new rules for the federal mortgage-refinancing program known as HARP 2.0 go into effect. It’s an update to the Home Affordable Refinance Program [HARP] launched in 2009, and its new provisions could help address a big, lingering problem facing homeowners and mortgage holders.

Approximately 4 million Fannie and Freddie borrowers owe more on their mortgage than their homes are worth. Across the US, nearly 11 million are underwater, or about 22.5% of all outstanding loans,. About 2.4 million hold less than 5% equity in their homes.

HARP is for homeowners having trouble refinancing their underwater mortgages through conventional methods. If the home has a Fannie Mae or Freddie Mac loan or guarantee, the owner can apply for refinancing via HARP.

What’s new and better in HARP 2.0?

Mainly, it’s the elimination of the loan-to-value cap for fixed-rate loans. Under previous versions of HARP, to qualify for refinancing, your loan could not exceed 125% of the current value of your home. That has been a huge problem for many homeowners whose property values tanked in the collapse of the real-estate bubble. When their loan exceeded their value by more than 125%, they lost the ability to refinance. Now, if you qualify for HARP, there’s no cap, and refinancing experts are calling that development very good news for homeowners.

Another change in HARP 2.0 is the removal of the “reasonable ability to pay” clause. Previously, lenders were required to determine if there was a reasonable chance that the borrower could repay the mortgage. Lenders based this factor on information in the loan application—things like payment history and having a source of income. Often, ability to pay is measured by a debt-to-income [DTI] ratio. But under the HARP 2.0 rules that go into effect on March 17, no DTI calculation is required [and here’s a little catch to be aware of] if the borrower’s payment does not increase by more than 20 percent. Otherwise, a 45 percent DTI applies.

To a non-financial layperson, removing the ability-to-pay clause sounds like a risky move, and, indeed, requiring the ability to pay has traditionally been a way of ensuring prudent underwriting judgment. But the change appears to be a response to concerns by lenders, who, according to DS News, a website for the mortgage-refinance industry, call the now-defunct clause “vague, subjective and a legal risk in case of a default. Under the new rules, lenders can now underwrite HARP loans by assessing borrower credit based on an objective metric– number of payments made.”

The idea behind eliminating the lender’s responsibility for “reasonable ability to pay” out of the HARP refi mix appears to be to remove a hurdle that has exacerbated the current refi logjam. Is this move just another giveaway to lenders, enabling them to make more risky loans without taking responsibility? We’ll have to wait and see.

FYI: HARP basics

The March 17 HARP tweaks don’t change the basics. The goal of HARP is to allow a homeowner to get a mortgage refinance for a lower interest rate and overall monthly payment. Just to review, to qualify for a HARP refinance, you must still:

-Be current on mortgage payments at the time you apply for a HARP refinance. You can have one 30-day late payment in the past 12 months, but none within the past 6 months.

-Have a loan on the property that is owned or guaranteed by Fannie Mae or Freddie Mac. [You can determine if you have a Fannie Mae or Freddie Mac loan at Fannie Mae Loan Lookup or Freddie Mac, or by calling 800-7FANNIE or 800-FREDDIE.

Hope for HARP, with a note of caution

Critics say that the original HARP, instituted in 2009, was too limited and would make only a slight dent in the crisis of underwater mortgages. Still, according to the Washington Post, between its inception in 2009 and the third quarter of 2011, HARP provided about 930,000 loans in total, or about 29,000 per month. An intermediate version of HARP 2.0, which began to take effect in late December 2011, spurred about 25,000 loans per month.

Some analysts suggest that he changes that take effect on March 17, 2012 could accelerate applications to the program. Moody’s has estimated that many as 1.6 million additional homeowners could benefit.

But there are some clouds on the horizon as well: Mortgage rates may be inching up. In late February, Freddie Mac reported that the average rate on 30-year loans has risen to 3.95 percent, up from the previous week’s rate of 3.87 percent. The average on the 15-year fixed mortgage rose to 3.19 percent from 3.16 percent. It hit a record low of 3.14 percent three weeks ago.  Rates above 4 percent could affect the attractiveness and effectiveness of HARP. That’s something to watch.

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