Refinance program retooled by Obama adminstration

 

Dow Jones reports:

The Obama administration and a housing regulator on Monday unveiled a revamped home-loan refinancing program, aiming to aid hundreds of thousands of Americans whose homes have fallen in value in the wake of the housing bust.

Didn’t we just go through this last year? Well, yes, but it wasn’t working.

The plan represents the latest federal effort to tackle a key impediment to the U.S. economy--a stagnant housing market caused in part by elevated numbers of homeowners who owe more than their homes are worth. It came after numerous Obama administration efforts to stabilize the housing market have struggled in an economy with stubbornly high unemployment.

The overhaul will let borrowers refinance their mortgages regardless of how far their home prices have plunged in any given market, eliminating a previous restriction that shut out homeowners who owed more than 125% of their homes’ current value.

Officials estimated that the changes will help families save $2,500 or more, on average, annually.

The plan is also designed to streamline the refinancing process by eliminating appraisals and extensive underwriting requirements for most borrowers, as long as homeowners are current on their mortgage payments.

The refinancing program is open to homeowners whose mortgages are owned or guaranteed by Fannie Mae (FNMA) or Freddie Mac (FMCC), the two government-controlled mortgage giants whose rescue three years ago has cost taxpayers $141 billion to date.

Regulators are revamping a program rolled out in 2009, the Home Affordable Refinance Program, or HARP, which lets borrowers with homes whose values have dropped to refinance. So far, only 894,000 borrowers have used it, of which just 70,000 are significantly underwater.

Fannie and Freddie will issue final pricing information and other technical details by Nov. 15, and some banks have said they could begin taking applications under the new program by as soon as Dec. 1. Mortgage insurers have also agreed to make it much easier to transfer existing mortgage-insurance coverage, which has blocked many borrowers from refinancing.

　

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