Relief for Homeowners Who Are Underwater

In a move that will come as a relief to all co-ops and condos with highly leveraged homeowners, Fannie Mae and Freddie Mac are giving a one-year extension to one of the most successful mortgage-refinancing programs inspired by the mortgage crisis.

As reported by Bloomberg, borrowers can continue to use the Home Affordable Refinance Program, or HARP, through September of next year. HARP allows some borrowers to refinance to a lower rate even if the equity they have in their home is less than 20 percent, the typical cutoff for some re-finances.

The Federal Housing Finance Agency, which oversees the mortgage giants Fannie Mae and Freddie Mac, also announced that after September 2017, refinancing will be available only to people with less than 3 percent equity in their homes at Fannie, and less than 5 percent at Freddie. Those cutoff points will likely limit refinancing to people who are underwater – that is, who owe more on their mortgages than their homes are worth.

So far, more than 3.4 million borrowers have refinanced through HARP, and 323,000 are still eligible to refinance under the program.