The GSE regulator has extended the Home Affordable Refinance Program (HARP) for one year so that Fannie Mae and Freddie Mac can continue to refinance high LTV and underwater mortgages.
Launched last April, HARP gives the GSEs the flexibility to go beyond their normal underwriting and mortgage insurance standards to refinance mortgages they already own or guarantee. In 2009, the two GSEs refinanced 190,000 single-family loans with loan-to-value ratios of 81% up to 125%.
Fannie Mae disclosed that it requested a HARP extension in its 2009 annual financial report. "Unless our regulator grants our request for an extension," Fannie said, the HARP program will expire after June 10 and "we will no longer have the flexibility" to refinance these loans.
Federal Housing Finance Agency acting director Ed DeMarco said current market conditions warrant an extension. It will "support and promote market stability," he said, and encourage more lenders to "fully adopt the HARP program."
Fannie has already refinanced over 100,000 families under the HAMP program — reducing their monthly payments by $150 on average.
"Extending HARP for another year will enable us to help even more families achieve an affordable mortgage," Fannie president and chief executive Michael Williams said.