Saying that it hopes to help several million more families save money while helping the economy, the Obama administration on Monday unveiled a multifaceted plan to encourage refinancing of mortgages.
The modifications to the Home Affordable Refinance Program include: Removing the current 125% loan-to-value ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac; waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie and Freddie; eliminating the need for new property appraisals in some refinancing transactions; and extending the end-date for the program from June 2012 to Dec. 31, 2013.
“This will provide a substantial benefit to the broader economy and to the housing market,’’ Secretary of Housing and Urban Development Secretary Shaun Donovan said in a conference call with reporters.
He said that regulatory changes are among the steps that the Obama administration can take without getting congressional approval. However, he urged lawmakers to pass the administration’s job creation measures as a means to help the economy and housing market even more.
Under the new rules, which are issued by the Federal Housing Finance Agency, these kinds of mortgages are eligible to be refinanced: It must be owned or guaranteed by Fannie or Freddie and been sold to one of them before May 31, 2009; it can’t have been refinanced under HARP except for Fannie loans under HARP from March-May, 2009; the current loan-to-value- ratio must be greater than 80%; and he borrower must be current on the mortgage at the time of the refinance, with no late payments in the past six months and no more than one late payment in the past 12 months.