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U.S. announces new aid for homeowners

(Xinhua)

08:35, October 25, 2011

WASHINGTON, Oct. 24 (Xinhua) -- The U.S. government on Monday announced new relief to help more homeowners refinance loans, as the latest step of the Obama administrations to stimulate the sluggish housing market and promote economic growth.

The Federal Housing Finance Agency (FHFA), along with government-backed mortgage financing institutions Fannie Mae and Freddie Mac, outlined a series of changes to the Home Affordable Refinance Program (HARP), to make it easier for homeowners to refinance their mortgage loans.

The program enhancements include eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers, while waiving certain representations and warranties that lenders commit to in making loans backed by Fannie Mae and Freddie Mac.

In addition, the existing 125-percent loan-to-home value ceiling for fixed-mortgages backed by Fannie Mae and Freddie Mac will also be removed, according to the leading housing regulator.

The new relief plan are set to help more homeowners classified as "underwater" because their mortgages cost more than their homes ' worth.

Building on the industry's experience with HARP over the last two years, the FHFA has identified several changes that will make the program accessible to more borrowers with mortgages owned or guaranteed by the state-controlled mortgage financing enterprises, said FHFA Acting Director Edward J. DeMarco.

"Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets," DeMarco added.

As of August, the two mortgage giants have helped approximately 894,000 families refinance their mortgages through the program since it was launched in early 2009, far less than the estimated number of 4-million bottom line.

The HARP only covers mortgages created before June 2009 and owned or backed by the two government-controlled mortgage financing institutions.

Meanwhile, the end date of the HARP, originally scheduled to end in June 2012, will be extended to Dec. 31, 2013, said the FHFA, adding that an additional one million people are estimated to be eligible.

U.S. President Barack Obama also promoted the new plan for homeowner relief during his visit on Monday to Nevada, the state with the highest foreclosure rate in the nation.

"Over the past two years, we've already taken some steps to help folks refinance their mortgages," Obama said at a speech to homeowners in Las Vegas. "But we can do more."

The president's fresh effort on housing signaled that he is taking executive steps, which does not require congressional approval, to address economic woes, as Republican lawmakers have been blocking most of his proposals.

Obama launched the 447-billion-dollar jobs plan last month to tackle near double-digit unemployment and spur the sluggish economy. However, the bill was defeated by the Senate as Republicans strongly opposed tax increase on the rich.

"I'm here to say that we can't wait for an increasingly dysfunctional Congress to do its job. Where they won't act, I will, " said Obama.

However, Obama acknowledged that his latest plan was not enough to bring the weak housing market back on its feet. "Given the magnitude of the housing bubble, and the huge inventory of unsold homes in places like Nevada, it will take time to solve these challenges."

However, the president's unilateral measures also have their limits. "They are not a substitute to congressional action," noted the White House press secretary Jay Carney.

The Mortgage Bankers Association (MBA), representing the U.S. real estate finance industry, welcomed the administration's changes to HARP. But it warned that theses changes are not going to be "a silver bullet" to solve all the issues facing housing market.

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