Fannie Mae and Freddie Mac allowed more than 28,000 underwater borrowers to refinance through a government program in June, up roughly 12% from the previous month and the first increase since February. The Home Affordable Refinancing Program launched in March 2009 to allow current borrowers who owe up to 25% more on their mortgage than the home is worth refinance into lower monthly payments. So far, roughly 838,400 Fannie and Freddie loans received a refinance, according to data released by the Federal Housing Finance Agency Thursday. The June total is the first increase since February, when HARP refis increased from 41,000 to 47,000. Totals declined every month since. In June, 23,000 of the HARP recipients held a loan-to-value ratio between 80% and 105%. More than 5,000 held an LTV between 105% and 125%.

Nearly 30% of current mortgages are in negative equity, according to Lender Processing Services. The Obama administration is reportedly working on a plan to develop a major refinancing program to assist many borrowers out into more affordable payments. According to Sen. Barbara Boxer (D-Calif.), who said her own program may become the framework for the administration's plan, more than 8 million Fannie and Freddie borrowers carry an interest rate above 6%. Her program would eliminate fees and negative restrictions for borrowers with LTVs above 125% to refinance into a lower rate and alleviate the housing market. The FHFA extended HARP in March for another year. Banking analysts have asked the administration to make it permanent. Even Federal Reserve Chairman Ben Bernanke urged Congress in a recent Federal Open Markets Committee to do more to help the ailing housing market and free up the overall economy. "Financial pressures on financial institutions and households have contributed, in turn, to greater caution in the extension of credit and to slower growth in consumer spending," Bernanke said. Write to Jon Prior. Follow him on Twitter @JonAPrior.