WASHINGTON, Oct. 24 (UPI) -- Federal regulators in Washington Monday announced changes to the Housing Affordable Refinance Program that previously met with limited success.
Edward DeMarco, acting director of the Federal Housing Finance Agency, which oversees the Federal Home Loan Mortgage Corp., known as Freddie Mac, and the Federal National Mortgage Association, known as Fannie Mae, said, "We know that there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach."
The program was meant to help homeowners who wanted to refinance at lower interest rates, but could not because their homes were worth less than what they owed on their mortgages.
With home prices falling, that stopped millions of homeowners from refinancing despite what the National Association of Realtors calls historic affordability levels.
HARP, launched in early 2010, has made 840,000 homeowners eligible for refinancing, but it was expected to help many more.
In Las Vegas, Monday, President Barack Obama said the burst housing bubble four years ago was "probably the single greatest cause of the financial crisis and this brutal recession."
"Nationwide, more than 10 million homes are underwater," he said, using the term for homes worth less than their loans.
"It's a painful burden for middle-class families. And it's a drag on our economy," he said.
From a technical point of view, the FHFA said Monday the enhanced HARP program, which applies only to Freddie Mac and Fannie Mae backed loans, would now remove the 125 percent loan-to-value ceiling for fixed rate loans.
Various Freddie Mac and Fannie Mae fees would also be waived, the FHFA said in a statement.
HARP is also dropping the requirement that homes being refinanced have a new appraisal done, which would make the process faster and cheaper and would eliminate the risk of disagreements over the appraisal that often leads to multiple reassessments.
