The Federal Housing Finance Agency (FHFA), which regulates government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, as well as 12 Federal home loan banks, today announced a changes to the Home Affordable Refinance Program (HARP) designed help reach even more troubled homeowners and enhance borrowers' chances of keeping their homes.
FHFA Acting Director Edward J. DeMarco said, "We know that there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach. Building on the industry's experience with HARP over the last two years, we have identified several changes that will make the program accessible to more borrowers with mortgages owned or guaranteed by the [GSEs]. Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets."
Borrowers who owe more than their home is worth--otherwise known as "being underwater" in one's home--are eligible for HARP; it is the only way such borrowers can seek to benefit from current low interest rates. Borrowers whose loans have been held by the GSEs since May 31, 2009 or before, who have current loan-to-value ratios (LTVs) greater than 80% are eligible.
The FHFA emphasized that the changes seek to encourage more participation in HARP through the elimination of "certain risk-based fees."
The HARP program was established in 2009 under the umbrella of the Obama Administration's "Making Home Affordable" program. According to the FHFA, nearly 894,000 borrowers have refinanced through HARP as of August 31, 2011.
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