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Many ineligible for ‘Home Affordable’ refis

Part 2: Will Obama's mortgage plan work?

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Editor's note: This is Part 2 of a three-part series. Read Part 1. Last week I criticized the government's new two-part program "Making Home Affordable" for being too narrow and limited in scope. This article describes the refinance part of the program, which applies only to mortgages owned or guaranteed by Fannie Mae or Freddie Mac. Purpose: The objective of the refinance program is to allow borrowers to refinance who otherwise find it impossible or excessively costly because of declines in the value of their properties. Under the program, loan balances can range up to 105 percent of current property value, but in all other respects, borrowers must meet conventional underwriting requirements: their existing payments must be current; they cannot have more than one 30-day-late payment in the previous 12 months; and their income must be sufficient to cover the new payments. Pricing: Interest rates under the program are "market rates," but what that mean...