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Obama Extends Homeowner Help Program October 24 2011 President Barack Obama is pushing his "we can't wait" economic agenda. President Barack Obama today announced steps to help more homeowners with government-backed mortgages refinance their loans and take advantage of today’s low interest rates. Politically, the housing initiative is the first salvo in the president’s new “We Can’t Wait” campaign, which Obama announced at a meeting with homeowners today in Las Vegas. The president will continue to press Congress to pass his jobs bill, even if it’s only in pieces, but in the mean time, he will take executive actions where he can to get the economy moving again. “I’m here to say that we can’t wait for an increasingly dysfunctional Congress to do its job," Obama said. "Where they won’t act, I will.” Housing is a good place to start since the collapse of the housing market led to the financial crisis and has continued to depress economic growth. The steps announced today by the Federal Housing Finance Agency will help save the typical homeowner who refinances about $2,500 a year--“equivalent to a substantial tax cut,” said Shaun Donovan, secretary of Housing and Urban Development. Giving these homeowners more money to spend will boost the economy overall, he said. And a growing economy will boost jobs, which in turn, will boost the housing industry. The new program applies to homeowners whose loans are owned or guaranteed Freddie Mac or Fannie Mae, the government-sponsored enterprises that are regulated by the FHFA. The agency’s Home Affordable Refinance Program has helped about 900,000 homeowners who owe more than their home is worth to refinance their mortgages and get lower interest rates. Homeowners must be current on their mortgages to qualify for HARP. Obama administration officials worked with FHFA and mortgage industry officials to remove barriers that were keeping more Americans from using HARP. Under the new program: The program’s 125 percent loan-to-value ceiling will be removed, making more homeowners who are underwater on their mortgages eligible for refinancing. • Costs associated with HARP refinancing will be reduced by eliminating certain fees for borrowers and the need for a new property appraisal in many cases. • Fannie Mae and Freddie Mac have agreed to waive certain representations and warranties made by lenders on existing loans, which will make other lenders more willing to refinance these loans. This will lead to more competition for HARP refinancings, which should enable homeowners to get lower interest rates. • HARP will be extended until the end of 2013. FFHA expects the changes will result in 1 million or more additional HARP refinancings, but it cautions that this projection is “inherently uncertain.” Hope Now, a mortgage industry alliance formed to help homeowners avoid foreclosure, praised the changes to the HARP program. “One of the biggest challenges in the current market is finding solutions for homeowners who aren’t delinquent, but unable to refinance at a more sustainable interest rate due to being underwater on their mortgage,” said Hope Now Executive Director Faith Schwartz. “The new plan now eliminates many of the barriers for homeowners trying to refinance.” Obama administration officials concede this program addresses only one of the housing industry’s many problems. “We are working on all fronts,” said Gene Sperling, director of the president’s National Economic Council.
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