Obama's Refinance Plan Explained
By Nick Timiraos
The Obama administration is revamping a program that's designed to let more homeowners refinance their mortgages
even if they don't have any equity. This isn't a new program, but instead attempts to turbo-charge an existing federal initiative called the Home Affordable Refinance
Here's a look at some frequently asked questions:
What is HARP? The Obama administration in 2009 rolled out HARP to refinance
borrowers whose loans were backed by Fannie Mae and Freddie Mac and who were current on their payments. The idea was simple: If you were making your payments on time but didn't have enough equity to refinance, you would be able to lower your rate without having to pay down your mortgage
balance or take out mortgage insurance
Initially, the program was limited to borrowers who owed between 80% and 105% the value of their homes. In mid 2009, the program was opened to borrowers who owed up to 125% the value of their homes.
But a series of unforeseen "frictions" have led fewer borrowers to take up on the offer of lower rates. Fewer than 900,000 homeowners have refinanced
under HARP over the past 2½ years, and just 72,000 of those borrowers have loan-to-value ratios between 105% and 125%.
for the rest of the Q&A.
Obama to Announce Refi Help for Underwater Homeowners
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