The Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to extend the Home Affordable Refinance Program by two years to Dec. 31, 2015.
The program was set to expire at the end of this year.
FHFA determined that extending the program will provide borrowers additional opportunities to refinance, give clear guidance to lenders and reduce losses for the government-sponsored enterprises and taxpayers.
"More than 2 million homeowners have refinanced through HARP, proving it a useful tool for reducing risk," said Ed DeMarco, acting director of the FHFA.
He added, "We are extending the program so more underwater borrowers can benefit from the lower interest rates."
Additionally, FHFA will soon launch a campaign to inform homeowners about HARP. The campaign will educate consumers about the program, its eligibility requirements and provide options on how to utilize the program before it ends.
To be eligible for a HARP refinance, homeowners must meet various criteria including, the loan must be owned or guaranteed by one of the GSEs, the loan most have been sold to one of the enterprises on or before May 31, 2009 and the current loan-to-value ratio must be greater than 80%.
As of January 2013, more than 2.2 million borrowers have refinanced through HARP since its inception in April 2009.