The Federal Housing Finance Agency
said Friday it extended its Home Affordable Refinance Program for one year.
The Obama administration launched the program in March 2009 to allow borrowers the chance to refinance out of negative equity and into lower rate mortgages. It is administered by Fannie Mae
and Freddie Mac
HARP was set to expire June 30, but with the extension, it will expire June 30, 2012.
The FHFA made some adjustments to the program, as well. Freddie Mac will now exempt HARP loans from their recently announced price adjustments, and Fannie Mae changed the eligibility date for the program to May 2009.
"The program expands access to refinancing for qualified individuals and families whose homes have lost value," the FHFA said.
In February, analysts predicted
an extension was likely as even the Mortgage Bankers Association lobbied
for HARP to continue. But HARP still faces difficulties in having its intended effect on the market.
"Lenders in general are reluctant to refinance higher LTV borrowers for which they currently do not have reps and warranty liability," Bank of America Merrill Lynch
analysts said. "This is because lenders do not want to take rep and warranty risk and incur servicing costs for a loan that is likely to default."
In 2010, Fannie and Freddie purchased or guaranteed more than 6.8 million refinanced mortgages. Of this, more than 621,000 were refinanced through HARP. Loan-to-value ratios on these mortgages ranged between 80% and 125%.
HARP activity for the GSEs was more than three times the 190,000 completed in 2009 when the program began.
Write to Jon Prior
Follow him on Twitter: @JonAPrior