In a boost to highly leveraged homeowners, Fannie Mae and Freddie Mac extended a mortgage refinance program by another year.
The Home Affordable Refinance Program (HARP), enacted in the wake of the 2008 crisis, allows borrowers whose equity is less than 20 percent of their home value to refinance their mortgages at low rates. Normally many banks don’t refinance loans with a loan-to-value ratio of more than 80 percent.
Borrowers can now benefit from the program through September 2017. Following that deadline, a new program will only allow borrowers with less than 3 percent equity (for Fannie Mae loans) or 5 percent equity (for Freddie Mac loans) to qualify for refinancing. Unlike HARP, that new program will no longer be limited to borrowers who took out their mortgages prior to 2009.
The Federal Housing Finance Agency, which oversees Fannie and Freddie, said there were about 323,000 homeowners in the first quarter who are eligible to benefit from HARP before it expires. [Bloomberg] — Konrad Putzier