President Barack Obama speaks on the American Jobs Act October...

President Barack Obama speaks on the American Jobs Act October 24, 2011 in Las Vegas, Nevada. Obama also announced a housing initiative to help homeowners with federally guaranteed mortgages refinance their homes. Credit: Getty Images

Federal officials Monday announced key revisions to a federal mortgage refinancing program, including a change that would eliminate a big hurdle to refinancing for some Long Islanders who have no equity in their homes.

Speaking at a campaign stop after the announcement, President Barack Obama highlighted the changes to his much-criticized refinance initiative, describing them as part of a multipronged effort to boost housing and the economy. Detailed rules are expected to be released next month.

This makeover will cut mortgage costs for more homeowners, who can then boost the economy with new spending, Obama said in Las Vegas, where property values have sunk 50 percent. Refinancing "also makes it easier for them to make their mortgage payments, so that they don't lose their home and bring down home values in the neighborhood," he said.

But the effort to expand the program's reach got mixed reactions on the Island, where successful efforts to refinance loans under the federal program have been few. Nationally, just under 900,000 people have refinanced under the program since it was introduced two years ago, far from the millions initially projected.

Because of the plunge in home prices in recent years, many homeowners owe far more on their mortgages than their homes are worth, preventing them from refinancing at lower interest rates. Until now, the Home Affordable Refinance Program, as the federal effort is known, has been limited to people whose mortgages do not exceed 125 percent of their home values. Under the new rules, there won't be a limit to how far "underwater" a homeowner can be and still refinance a mortgage.

Moreover, some borrowers will no longer be charged certain fees based on their credit risk, while others will see such fees reduced.

Such rule changes won't help the hardest hit homeowners. Delinquent borrowers, for instance, aren't eligible. Of the Island's home loan borrowers, one in 20 has no equity and one in 10 is delinquent, said mortgage tracker CoreLogic.

"It sounds like a wonderful thing, but people don't have jobs and they're not going to get a refinance if they don't have income," said Carol Yopp, head of foreclosure prevention at the Long Island Housing Partnership in Hauppauge.

One question is how many more people can be helped by relaxing the rules. The Federal Housing Finance Agency estimated an additional 900,000 borrowers could be helped by the time the program ends in December 2013.

John Walsh, president of Total Mortgage, a Connecticut-based lender that gets much of its business from the Island, said he'll be watching what federal officials put in their written rules: "What they determine to be the new, more flexible underwriting standards will determine the level of success of the new program."

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