In February, President Obama announced the Home Affordability Program. Under this program, borrowers with loans owned or guaranteed by Fannie Mae or Freddie Mac who had loan-to-value ratios of 80% to 105% and were not delinquent on their loan payments, could refinance at lower rates without buying mortgage insurance, or paying for more insurance than they already had.
Effective today, that top limit has been increased to 125%. This change is an acknowledgment that at least one in five homeowners now has negative equity in their homes. It also is intended to stimulate the home refinance market which has seen a slow-down in the past few weeks as interest rates creep over 5.5%