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.

The changes to the loan programs are specifically intended to bypass Congress, which is stalled on agreeing to new plans to increase jobs and jump-start the economy. Obama is trying on a new catchphrase, "We can't wait," to goad Republicans for inaction, even as the Democratic-led Senate votes against the president's other proposals.

The housing program Obama will announce Monday will be implemented by the independent Federal Housing Finance Agency. The administration official had no estimate for how many homeowners could be helped by relaxed rules.

While on a West Coast swing this week, Obama will also announce policy changes to ease college graduates' repayment of federal loans.

After a drop-in to Las Vegas, for high-money fundraising for his reelection campaign, the president will travel to Los Angeles for three more fundraisers, including one at the home of movie stars Melanie Griffith and Antonio Banderas. Obama will also make stops this week in San Francisco and Denver.

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