A couple of tweaks to the government’s Home Affordable Refinance Program could make 916,000 additional borrowers eligible for the program, thereby staunching the flow of mortgage defaults among underwater borrowers and helping “firm up” the housing market, according to economists at the Federal Reserve Bank of New York.

Currently, only borrowers whose mortgages were obtained by Fannie Mae or Freddie Mac by June 1, 2009, are eligible, and borrowers are allowed to use HARP only once.

“We find that altering these rules could heighten refinancing activity substantially,” particularly in the face of rising mortgage rates, the economists said.

Source: New York Fed

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