With the President traveling to Las Vegas on Oct. 24 to announce that the Federal Housing Finance Agency (FHFA), with Fannie Mae and Freddie Mac, is expanding eligibility for the Home Affordable Refinancing Program (HARP), NAHB Chairman Bob Nielsen said it was “encouraging” to see “that the Obama Administration is beginning to turn its attention to restoring the nation’s housing market, which is crucial for the health of our economy.”

The White House said the changes are aimed at helping responsible borrowers with little to no equity in their homes refinance their mortgages to take advantage of today’s historically low interest rates.

HARP is the only program that enables borrowers who are “underwater” and owe more than their home is worth to refinance their mortgages.

As of August, fewer than 900,000 home owners had refinanced under the program, and it is hoped that the number will double under the new changes.

“Making more borrowers eligible for refinancing their mortgages by enhancing HARP will give a badly needed boost to consumer confidence,” Nielsen said.

“Enabling additional home owners to take advantage of today’s low mortgage interest rates in cases where their loans are greater than the value of their homes will give some households more money to spend on other things and enable others to at least pay their mortgages off at a faster rate,” he said.

“However, for the many families who have fallen behind in their payments because of the weak job market, the changes to HARP will have no benefit,” Nielsen said.

“HARP is only open to mortgage borrowers who have remained current with their payments. Clearly, additional policy initiatives are urgently needed to prevent foreclosures and deal with the inventory of foreclosed homes.”

Among the most important HARP changes is the elimination of a 125% loan-to-value cap, which will significantly expand the number of home owners who can participate.

Other changes include:

• To encourage more refinancing, limited representation and warranties have been waived, eliminating the possibility of additional liability for lenders.
  
  
• Fees for riskier underwater loans are being waived for borrowers who refinance into shorter-term loans, and those fees will be reduced for others, although it is not yet know by what amount.
  
  
• The need for a new property appraisal is eliminated where there is a reliable AVM (automated valuation model) estimate provided by FHFA, Fannie or Freddie.
  
  
• The program — which had been set to expire on June 30 of next year — has been extended through the end of 2013.

While Nielsen noted that the improved program will help many home owners, he also said that the Administration has yet to deal with several key issues that are undermining the housing market.

“It is essential to address overly restrictive mortgage lending standards, inappropriate credit limitations on home builders and a broken appraisal system that is contributing to housing price instability,” Nielsen said.

“All of these factors are detrimental to the full-scale housing recovery we need to rally consumers and get a disappointing economic recovery moving forward,” he said.

“We still have an enormous amount of work to do to repair housing. The HARP changes are a good step, but our leaders in Washington need to quickly focus on a broader range of actions for improving the housing marketplace.

“It has taken a painfully long time for them to recognize that housing is indispensable to the job creation and growth that have been sorely lacking since the end of the recession.

“The American people are losing patience and they expect far better economic prospects than those they are finding today, which stem in large part from neglecting housing,” he said.

The White House noted that nearly 11 million Americans are underwater on their mortgages, and that home owners have lost $7.25 trillion in home equity since the peak of the housing bubble in 2006.

Changing HARP to reach more borrowers is one of several executive actions being taken in the face of congressional opposition to the President’s American Jobs Act, the White House said.

For more information, email Steve Linville at NAHB, or call him at 800-368-5242 x8597.

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