President Obama Attempting 'Underwater' Rescue of Housing Market

President Obama to Announce Major Revamp of Home Lending Program, HARP

Published October 24, 2011 | FoxNews.com

Seeking to breathe new life into a sagging economy, President Obama will attempt an executive branch rescue of homeowners trying to refinance underwater mortgages, with a new initiative that lets people with little or no equity get a better interest rate at a reduced cost.

The initiative, the first in a series of announcements expected this week by the president, applies to homeowners with federally guaranteed mortgages who are current on their payments.

The revamped Home Affordable Refinance Program, which aims to avert foreclosures, is expected "to encourage new, lower-cost loans" to more homeowners who are paying more than the value of their properties, a senior administration official said ahead of Obama's Monday announcement.

The three-year-old Home Affordable Refinance Program was supposed to allow refinancing for up to 125 percent of a home's value on mortgages owned or guaranteed by Fannie Mae or Freddie Mac, but has been stuck on tight eligibility rules, including excluding people with high credit scores or other attractive risk offers.

The change is not a mass refinancing of everyone in America, but a targeted fix to open up the program to more people who are underwater.

Obama will announce the initiative Monday in Las Vegas, where an estimated 60 percent of homes are underwater. But it could also help borrowers in other states, including Arizona, Florida, California and elsewhere where the underwater mortgage rate is high and borrowers are stuck without options to lower their payments.