Federal officials just announced an extension to the refinance program aimed at helping homeowners who owe more on their mortgages than their homes are worth.
The Home Affordable Refinance was set to expire June 30 but has been extended to June 30, 2012, said the Federal Housing Finance Agency. The program covers Freddie Mac and Fannie Mae loans, and since its inception two years ago, about 622,000 mortgages have been refinanced, according to the agency’s latest quarterly report.
The Mortgage Bankers Association had lobbied the agency for the extension, saying the housing market was still in a shaky state.
Under the program, lenders, investors and loan servicers get financial incentives to help borrowers who are current on their payments but whose mortgages are up to 125 percent of the property value.
President Barack Obama unveiled the program as part of the Making Home Affordable rescue plan in March 2009.
Back then, rates were trending down, and homeowners struggling to pay their mortgages could not take advantage of lower rates because of the credit crunch. People with no equity in their homes found it practically impossible to refinance. Lenders considered such loans risky because properties were losing value with no end in sight.
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