An improved refinance program that is expected to allow millions of underwater borrowers to refinance their mortgages was just announced.
Borrowers will be able to refinance their mortgages owned by Fannie Mae and Freddie Mac under the Home Affordable Refinance Program, or HARP, even if they owe more than what their house is worth. The previous version of HARP allowed borrowers to refinance up 125 percent of the home's appraised value. Millions of borrowers couldn't benefit from HARP because of that cap. To states that were hardest hit by foreclosures, such as Florida and some areas in California, the previous version of HARP was useless.
The Federal Housing Finance Agency, Fannie and Freddie announced it will remove the cap and several other barriers that have prevented borrowers from taking advantage of the program.
HARP also was extended through Dec. 31, 2013. The program applies to loans that were sold to Fannie or Freddie on or before May 31, 2009.
To be eligible for the program, borrowers must be current on the mortgage at the time of the refinance, with no late payments in the past six months and no more than one late payment in the past 12 months.
When will the revamped HARP be available to borrowers? Fannie and Freddie will send instructions to lenders by Nov. 15. Some lenders may start offering refinances under the improved plan by Dec. 1, but the timing will vary, according to the FHFA.
Check back later for more details.