Government-sponsored programs to help qualified borrowers refinance their mortgages or prevent foreclosure by working out a lower-payment modification will be extended through 2016.
Federal Housing Finance Agency (FHFA) Director Melvin L. Watt, the independent overseer of Fannie Mae and Freddie Mac, disclosed Friday at an event that the two mortgage giants will extend the Home Affordable Refinance Program (HARP) for loans issued before the housing crash and the Home Affordable Modification Program (HAMP) for struggling borrowers.
The programs were scheduled to close down at the end of 2015.
Moreover, the FHFA will take lessons learned since the launch of the two programs, especially HARP, to “explore possible streamlined refinance solutions for future enterprise loans,” Watt said in remarks prepared for a Los Angeles speech.
Watt also encouraged the estimated pool of eligible borrowers, about 600,000 nationwide, to take advantage of HARP now while mortgage rates remain historically low (the 30-year fixed rate averaged 3.8 percent this week, according to Freddie Mac).
3.3 Million Have Refinanced Under HARP
“In the meantime, we want to encourage the 600,000 plus borrowers nationwide who would still benefit from the HARP program to take advantage of HARP while they still have the opportunity to do so and while interest rates remain low,” Watt said. “Approximately 31,000 of these borrowers are right here in California, and we want them to join the nearly 3.3 million borrowers who have already taken advantage of HARP to reduce their monthly payments and obtain some financial relief.”
Fannie Mae and Freddie Mac have operated mostly under taxpayer support since being seized in late 2008.
HARP was created by FHFA specifically to help homeowners who are current on their mortgage payments, but who are underwater on their mortgages. This means they owe almost as much or more than the current value of their homes.
Watt added: “Although the number of new borrowers entering these two programs continues to decline, in part because many eligible borrowers have already taken advantage of them and in part because of recovering house prices, lenders and servicers are continuing to approve new HAMP modifications and HARP refinances.”