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The federal program designed to help consumers with underwater mortgages avoid losing their homes and make their monthly payments more affordable has been extended for another two years past its original proposed end date.

The Home Affordable Refinance Program is designed to help consumers who owe more on their mortgage than their property is currently worth as long as those loans are backed by either Fannie Mae or Freddie Mac. The program will now last through December 31, 2015, as opposed to its original end planned for the same date this year, according to a report from the Federal Housing Finance Agency. Since the program began in 2009, HARP has been able to help more than many Americans get their housing costs under control and stay in properties they might otherwise have lost to foreclosure.

“More than 2 million homeowners have refinanced through HARP, proving it a useful tool for reducing risk,” said FHFA Acting Director Edward DeMarco. “We are extending the program so more underwater borrowers can benefit from lower interest rates.”

Meanwhile, in addition to expanding the amount of time for which the program is available to consumers, the FHFA is also expanding efforts to educate Americans about the ways in which HARP can help them, the report said. Making clear what eligibility requirements the program holds, and the options they may have for enrolling, could help to encourage more homeowners to seek out the program in an effort to stay in their houses and find more affordable mortgage deals going forward. Further, it’s believed that these expanded efforts will also help to reduce the losses being suffered by Fannie, Freddie and U.S. taxpayers.

HARP requirements for homeowners include the necessity of their loan having been backed by Fannie or Freddie on or prior to May 31, 2009, the report said. In addition, the loan-to-value ratio of the home must be more than 80 percent, and it cannot have previously been restructured through HARP, unless it is controlled by Fannie and was refinanced between March and May 2009. Finally, borrowers must also have made all payments within the last six months, and missed no more than one in the previous 12 months.

Underwater homes are still a major problem nationwide, but with values rising, many have been able to get out from under negative equity in the last year or more, and potentially list their properties on the market once again.

Image: iStockphoto

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  • http://frugalguruguide.com/articles/ Jenny @ Frugal Guru Guide

    This will be especially helpful for people who have lost jobs and income as well as equity, who have been trapped in homes that were affordable until they lost jobs and had to take lower-paying positions.

  • Genelle Peterson

    Can I refi even if I have equity in the house but my business fell off the cliff in 2008 and I continue to struggle to make ends meet? Also I lost my house in the foreclosure process of 2010. I’m in independent foreclosure review process by comptroller. Since I was harmed and now realize the process will not get me much back, should I get a lawyer and sue? What kind of lawyer to call and do you of any lawyer successful that I could contact? Please let me know. I’m loosing everything! Genelle peterson

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