Modifications to the Home Affordable Refinance Program
Earlier this month, the Federal Housing Finance Agency announced an amendment to its Home Affordable Refinance Program, expanding refinance eligibility to help those homeowners who are at risk of being “underwater.”
The Obama Administration’s Home Affordable Refinance Program loan-to-value requirement has been raised to 125%. Previously, the program, announced in February, only applied to borrowers whose first mortgage did not exceed 105% of the current market value of the property.
The rationale behind the change to the program is that with the drastic decrease in property values in many areas, an additional 5% over the value of a mortgage wasn’t enough to help many borrowers. However, the program applies only to those borrowers who haven’t missed loan payments in the past year, and borrowers must hold a loan that was purchased by Freddie Mac or Fannie Mae. For those who are unable to make their payments at all, there are different programs that apply, which we will cover in a later blog post.
As discussed in Present Value’s previous blog post, “Decrease in Home Values Correlates to Increase of Homeowners Who Are ‘Underwater,’” a report released by Zillow.com in May, estimated that 22% of homeowners had mortgage balances that were greater than the value of their homes and that an additional 2.2 million borrowers were at risk of falling into this position if housing values declined an additional 5%.
The additions to the program will be beneficial for homeowners whose only other options would be to hope for the best in terms of home valuations or would be at risk for foreclosure. For more information on finding out the most accurate value of your home, click here.
By: Present Value
Tags: Fannie Mae, Federal Housing Finance Agency, Freddie Mac, Home Affordable Refinance Program, present value, Underwater
10 Responses to “Modifications to the Home Affordable Refinance Program”
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August 23rd, 2009 at 7:31 pm
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August 23rd, 2009 at 8:59 pm
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September 23rd, 2009 at 3:56 pm
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September 25th, 2009 at 11:15 pm
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September 27th, 2009 at 1:19 pm
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October 13th, 2009 at 1:13 pm
I really liked your blog!
December 5th, 2009 at 4:19 pm
Fix your credit and get out of debt. This is a bag of tricks to ending up with more mortgage refinance closing costs. In the last 2 years, the entire housing industry has seen major declines in home values due to the huge rise in defaults. Part of the problem that has been created was due to the sub prime crisis that was created when major banks started to issue lots of risky credit, and then insured those loans with credit default swaps.
December 6th, 2009 at 3:01 am
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December 29th, 2009 at 3:57 pm
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February 8th, 2010 at 8:27 am
Thank you for the information. I have been trying to avoid foreclosure and this helps me greatly to put things in perspective