Obama’s mortgage refinancing program called ‘Making Home Affordable‘ program is supposed to expire this June 2010. It was announced in April 2009 and was meant to help 5 million troubled homeowners.

Unfortunately many of these homeowners experienced different problems. Some homeowners could not qualify for the program because they were too deep in debt. The program is also limited to mortgage loans backed by Fannie Mae or Freddie Mac. Many homeowners have second mortgages or private mortgage insurance, which got in the way of refinancing a primary loan. There are reasons for not refinancing because many were not able to afford the closing fees involved in it. Additionally, in many cases it is the lenders’ delay in processing complex refinancing packages for homeowners with secondary mortgages or their struggle to update their computer systems to accommodate the program. As a result only about 190,000 homeowners were able to refinance their mortgage.

The administration announced last Monday that it is extending its refinancing assistance for another year to help more homeowners who have little or no equity. So far, the program has fallen short of target to help mortgage borrowers with loan-to-values between 80-125%.

The Federal Housing Finance Agency has extended the program until June 2011 in order “to support and promote market stability, and to encourage lenders and other mortgage market participants to fully adopt the program”. Ever since the program was launched last year market conditions have not changed significantly and the extension until next year is hoped to give lenders more time to implement the refinance plan.

In the beginning, the program targeted borrowers whose loan balances were only slightly higher than their property values but later in October 2009 it was expanded to include those who owe up to 125% more than what their homes are worth. The reason for targeting these homeowners is the greater risk of foreclosure that underwater borrowers are facing. By lowering their payments, borrowers are hoped to decrease their chances of falling into default.

Michael J. Williams, president and chief executive officer of Fannie Mae hopes that extending the program for another year will enable them to help more families. However, a housing consultant in Vienna, Thomas Lawler thinks that the overall volume in 2009 was an embarrassingly small amount. He said, “I don’t think it will make a big difference to have the program extended.”

If you need to have your mortgage loan refinanced, find more information here on the official website of the program http://www.MakingHomeAffordable.gov/

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