HARP undergoes changes to help homeowners refinance

After several months of anticipation, the Federal Housing Finance Agency and mortgage giants Fannie Mae and Freddie Mac announced a series of changes to the Home Affordable Refinance Program. The reforms were implemented so more people whose homes are underwater can refinance their mortgages.

"We know that there are many homeowners who are eligible to refinance under HARP and
those are the borrowers we want to reach," said Edward DeMarco, acting director of FHFA. "Building on the industry's experience with HARP over the last two years, we have identified several changes that will make the program accessible to more borrowers with mortgages
owned or guaranteed by the enterprises."

Some of the changes to the program include eliminating certain risk-based fees for borrowers who choose shorter-term mortgages and increasing the eligibility requirements needed to take advantage. Previously, HARP was restricted to those who owed 125 percent of the value of their home or less.

The government is hopeful that the program will help improve the sluggish real estate market. Housing analysts are skeptical, however, because people still have to qualify.

Refinancing at a prime interest rate requires consumers have clean credit histories. Lenders are generally more likely to extend loans to consumers with good credit scores because it's an indication they have a history of making their payments on time.