A little used program intended to aid borrowers whose homes have fallen in value will be extended for another year.
The Home Affordable Refinance Program, or HARP, was due to expire this June. Instead, it will stay in effect through June 30, 2011, according to a statement from the Federal Housing Finance Agency.
The program allows borrowers who owe more than their homes are worth to refinance at lower interest rates. It’s been little used and is deemed only moderately successful at best.
“It was originally projected to help 4 million to 5 million homeowners with loans owned or guaranteed by Fannie Mae and Freddie Mac. So far, it has helped around 220,000, according to the Treasury Department,” Alan Zibel of the Associated Press writes.
Many of the underwater homeowners seem to be concluding that they’d be better off walking away than staying in a home that is worth less than the debt burden that comes with it.
Here’s the full statement from the FHFA:
Federal Housing Finance Agency Acting Director Ed DeMarco today announced the extension of the Home Affordable Refinance Program, (HARP), a refinancing program administered by Fannie Mae and Freddie Mac, to June 30, 2011. The program is a key component of the Administration’s Making Home Affordable Program announced last February. The HARP program expands access to refinancing for qualified individuals and families whose homes have lost value. The program was set to expire on June 10 of this year.
“FHFA has reviewed the current market situation and the state of mortgage insurance availability and has determined that the market conditions that necessitated the actions taken last year have not materially changed,” said DeMarco. “Accordingly, to support and promote market stability, and to encourage lenders and other mortgage market participants to fully adopt the HARP program, including the implementation of the October 2009 expansion of loan-to-value ratios (LTVs) to 125 per cent, FHFA is authorizing the extension of HARP until June 30, 2011.”
In 2009, Fannie Mae and Freddie Mac purchased or guaranteed more than 4 million refinanced mortgages. Of this total, 190,180 were HARP refinances with LTVs between 80 per cent and 125 per cent. The HARP began in April 2009 and has grown over the past few months. For more information on Fannie Mae and Freddie Mac refinance activity, see FHFA’s monthly Foreclosure Prevention & Refinance Report. Additionally, homeowners can visit www.MakingHomeAffordable.gov for additional information on the program.