NEW YORK (CNNMoney) -- President Obama will announce changes in the government's Home Affordable Refinance Program (HARP) on Monday, making it easier for homeowners to capitalize on current low-interest rates by refinancing their old, high-interest mortgages.
More than 890,000 Americans have already utilized the HARP program to reduce monthly mortgage payments but many more have not. One reason: The current rules do not permit severely underwater borrowers to participate.
The new rules will allow homeowners who owe more than 125% of the market value of their homes -- $125,000 in mortgage balance on a home worth less than $100,000, for example -- to get new loans.
"We know there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach," said Edward DeMarco, acting director for the FHFA.
Jaret Seiberg, an analyst for MF Global Inc.'s Washington Research Group, which analyzes public policy for institutional investors, said he expects the lifting of that restriction will help only a limited number of borrowers.
"This change is unlikely significantly to expand the universe of eligible HARP borrowers as the borrowers must still be current and qualify for a new loan," he said in a research report.
Perhaps more significantly, Seiberg believes, the changes may allow banks to refinance loans without fear that Fannie Mae (FMNA) and Freddie Mac (FMCC, Fortune 500) will force them to repurchase those loans if a large percentage of them fail.
Fannie and Freddie will also reduce risk-based fees to enable underwater borrowers to better afford the new loans and extend HARP through to the end of 2013.I hope someone can benefit from this news.
Federico Diaz and MDR Lofts
Marina del Rey and Venice Beach Loft Specialist. www.MDRLofts.com
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