The housing crisis, now several years behind us, was one that will never be forgotten. After a significant housing boom, all good things came to an end and housing values plummeted. This left behind in its wake a large number of homeowners who no longer had equity in their homes. Millions of homeowners ended up owing more on their mortgage than what the home was worth. Finally, things are coming full circle and rising home prices are giving equity back to homeowners once again.

In 2009, the Obama administration initiated the Home Affordable Refinance Program, also known as HARP. This original program had its limitations, though, and many homeowners were not able to refinance due to excessive loan to values. At the end of 2011, HARP 2.0 was announced as an answer to this growing concern. HARP 2.0, which is still in effect, removed the loan to value caps which opened this refinance program up to all underwater borrowers, even those above 125%. Refinancing was slow until June when securitizing loans above 125% became effective. With these changes, 2012 has become a very successful year for the HARP program. HARP 2.0 will be available through the end of 2013 for borrowers who have loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009.

At the same time, FHA enhanced its FHA streamline refinance program so that borrowers who have loans that were FHA endorsed prior to June 1, 2009 can refinance with drastically reduced upfront and annual mortgage insurance premiums. The FHA streamline with no cash out allows borrowers to trade in high rate mortgages to lower mortgage rates without the need of an appraisal, credit check or other documentation. It is designed to be quick and easy. This program has also set a record for refinances this year.

Mortgage rates have been at record lows throughout this year and should continue since the inception of QE3. With QE3, the Feds are purchasing $40 billion of mortgage backed securities each month in the effort to keep rates low so that more people will re-enter the housing market by purchasing. By doing so, it is hoped that housing will spur economic growth and ultimately increase jobs.

As evidence that these initiatives are working, The Obama Administration's Housing Scorecard released by the Departments of Treasury and Housing and Urban Development shows that the Federal Housing Finance Agency's (FHFA) housing price index posted its largest annual gain in five years. In addition, new home sales were at the fastest pace since April 2010 when the end of the homebuyer's tax credit program was near completion. These improvements and increasing strength in the housing market have lifted approximately 1.3 million homes above water with their mortgages. These programs helped underwater homeowners reduce their monthly mortgage payments or length of loans and, in effect, reduced the number of foreclosures and defaults. With less depressed housing on the market, home prices have been able to stabilize and even, in some areas, increase. Equity is once again returning to these and all homeowners. Some borrowers will no longer require special mortgage programs, but can use traditional mortgage refinances.

It is hoped that this will continue to happen, equity will increase and consumers will continue to see improvements in the economy. There is still hopes that the Menendez/Boxer bill will be approved and put into effect. This would make HARP 2.0 available for all homeowners regardless of loan to values and what investor owns the loan. In short, it would be refinancing for everyone. Now that elections are over, maybe this will become a reality that will further improve housing market conditions and allow consumers to save on their mortgages in order to get more money flowing into the economy.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders' rate sheets to determine the most accurate mortgage rates available to well qualified consumers at about a 1 point origination fee.

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