New-and-Improved HARP 2.0 Is Here

The government has expanded its refinancing program, but will enough homeowners benefit?

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Has help finally arrived for America's struggling homeowners?

Today, homeowners can start submitting applications to the government's new-and-improved mortgage refinancing program, which is primarily designed to help "underwater" borrowers, or those who owe more on their home than it's worth.

That's about 11 million Americans, according to recent estimates, a chilling reminder of the ravages of the housing market meltdown.

[Read: Road Map to a Housing Rebound.]

The revamped program—dubbed HARP 2.0—further expands a current measure, the Home Affordable Refinance Program, which helps homeowners who owe up to 125 percent of their home's value.

The 125 percent benchmark was increased from the original 105 percent, but that still hasn't been enough to help many homeowners struggling to stay afloat. The latest version gets rid of the 125 percent cap, which means even deeply underwater homeowners can now access the program.

The end goal is to lower monthly payments for underwater homeowners to keep them current on their mortgage payments and out of foreclosure. The hope there is to stem the flow of foreclosures and contain the supply of homes on the market, the magnitude of which has put severe downward pressure on prices.

But while the program is a good step, it probably won't be enough to help the majority of underwater homeowners. Keith Gumbinger, vice president at mortgage site HSH.com, estimates only about 1 million homeowners will actually qualify for and benefit from the new program.

[Read: Huntsman: Shut Down Fannie and Freddie.]

"Even with this expansion we'll probably continue to fall short," he says. "This only helps borrowers who are lucky enough to have their loans held or guaranteed by Fannie Mae or Freddie Mac. That's not everybody. There are many, many millions of homeowners whose loans don't fall into that category."

Still, he says the program should help provide some stability over the longer term for the housing market.

Do you qualify to have your mortgage refinanced under HARP 2.0? Check out this neat tool from Zillow.

mhandley@usnews.com

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