Housing Rescue Program Expands to Cover More Borrowers

Frustrated borrowers who have yet to benefit from the Obama administration housing rescue plan may be able to benefit from a new expansion to the program. The number of borrowers eligible for refinancing is being increased by the changes to the program.

Borrowers with mortgages worth 125% of their home’s value or less will now be eligible for refinancing under these new qualifications. Previously, mortgages worth 105% or less were only eligible.

In addition to the value requirments, borrowers will have to be current on their mortgages, as well as have loans from Fannie Mae or Freddie Mac, in order to participate in the Home Affordable Refinance Program (HARP).  Since 30% of borrowers do owe more than their homes are worth, and about half of homes in America are owned or guaranteed by the two companies, this is expected to help many more Americans–an increase of up to 3 million–help keep their homes with Relief Refinance Mortgages and other modifications.

Though the Treasury had originally estimated that 5 million Americans would benefit from HARP, there are concerns over whether or not that number will be met. Mortgage rates have not yet fallen to the low rate of 5% that the government had hoped to drive them to, resulting in less savings than the government had anticipated.

Indeed, the program has fallen quite short on its expectations as of yet, having helped only 20,000 borrowers through June.

These higher limits “will make a critical difference in our ability to help many more Americans to stay in their homes,” according to Shaun Donovan, Secretary of Housing and Urban Development.