In the face of sustained home foreclosures, the government’s new Home Affordable Refinance program will expand to cover homeowners whose mortgages are up to 125 percent of their home value.
The $75 billion Treasury Department program, which aims to help homeowners responsibly reorient their home finances, had limited the rate to 105 percent of home value since its mid-February inception.
For example, homeowners with a $250,000 mortgage on a home worth $200,000 would now be eligible to refinance. The increase, which had been discussed for weeks, was announced in early July.
“This decision is part of our ongoing efforts to maximize the effectiveness of the Making Home Affordable program and adapt to an ever-changing housing market,” Treasury Secretary Tim Geithner said in a news release. “By expanding refinance eligibility, we can bring relief to more struggling homeowners more quickly. It’s a crucial step in our broader efforts to get America’s housing market and economy on the path to recovery.”
Created this spring to help homeowners facing foreclosure, the Making Home Affordable program basically pays lenders to lower a homeowner’s mortgage payment. About 270,000 mortgages are currently under reconstruction. Only homeowners with mortgages owned or backed by Fannie Mae and Freddie Mac are eligible to participate in the program.
In all, the Treasury Department hopes to modify 4 million mortgages within the next three years.
“The higher refinancing will allow more homeowners to strengthen their finances by taking advantage of lower mortgage rates,” Federal Housing Finance Agency Director James Lockhart said in a statement.
But some housing and finance experts claim the restructuring program has yet to make a serious dent in the lingering foreclosure problem. Banks remain inundated with requests. Some have so far failed to plow through the volume anticipated by Treasury officials and others.
Homeowners struggling to make mortgage payments can learn more about the Home Affordable Refinance program by visiting the Making Home Affordable website. The site provides a host of resources, including information on eligibility requirements and financial counseling.
Homeowners in need of immediate assistance can contact the Homeowner’s HOPE Hotline at 1-888-995-HOPE.
This post was written by Brandon Laughridge of Mortgage Loan Place. MLP educates consumers on all types of mortgage loans with an emphasis on goverment products such as FHA 203(b) loans and FHA 203(k) loans.
photo credit: Fr Antunes ( in Holidays)
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I’m currently in the middle of my own “Making Home Affordable” refinance. For us it has been a life saver because without it refinancing would have meant that we would have to start paying PMI – even though we put 20% down when we bought the house. Our value has dropped by 53,000 in the last 3 years. So even though I’m not a big proponent of all these government programs, i’m still certainly going to take advantage of them while they’re here!
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Wow! It’s interesting how this economy really affects a broad spectrum of people. Good to see the program is working out for you.
I guess I would like to see if they are changing the recourse policy of these loans. I had read that they becoming ‘recourse’ loans which gives the bank more power to sue the home owner if the fix doesn’t save them.
It could be scary since most people don’t actually read their loan docs.
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It is scary that many don’t read their documents before signing them!
Well, this brilliant plan doesn’t help all people that’s for sure! What about those of us that have the unfortunate problem of not being backed or owned by FannieMae or FreddieMac and have been current on our payments, but have a loss of income due to layoff??? The government isn’t doing anything to help us out, but guess who’s going to be required to help pay all this back, ME!!!
That is a good point. It’s tax payer money that helps to fund this.
I’m currently in the middle of my own “Making Home Affordable” refinance. For us it has been a life saver because without it refinancing would have meant that we would have to start paying PMI – even though we put 20% down when we bought the house.