In a press release published this morning, Ed DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA), announced the Home Affordable Refinance Program (HARP) will be extended for an additional year. The original expiration date for the popular program was set for June 10, 2010, but has now been extended to June 30, 2011.
While mortgage analysts believe current mortgage rates will rise when the Federal Reserve completes its purchase of the $1.25 billion in mortgage-backed securities by the end of March, FHFA believes market conditions have not changed significantly enough to justify ending the program this year. According to DeMarco, “FHFA has reviewed the current market situation and the state of mortgage insurance availability and has determined that the market conditions that necessitated the actions taken last year have not materially changed … Accordingly, to support and promote market stability, and to encourage lenders and other mortgage market participants to fully adopt the HARP program, including the implementation of the October 2009 expansion of loan-to-value ratios (LTVs) to 125 percent, FHFA is authorizing the extension of HARP until June 30, 2011.”
Established in April 2009 under the Obama administration’s $75 billion Home Affordable Modification Program (HAMP), the HARP program is designed to help homeowners whose mortgage loans are owned by either Fannie Mae or Freddie Mac, and the value of their homes is less than they owe on their existing mortgage. Of the nearly one million homeowners eligible for the HARP program, it is estimated that approximately 119,000 have been afforded the benefit of the historically low current mortgage rates. Of the nearly 900,000 remaining homeowners, many are either ineligible for the program, or merely have not completed the process of enrolling.
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