Journalism in the Public Interest

FHA Refinance Program

Refinancing Underwater Mortgages






actually invested, loaned, or spent


A program under the Emergency Economic Stabilization Act More info from
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The program, announced in March of 2010, was aimed at helping homeowners who are underwater -- they owe more on their mortgage than their house is worth. The homeowner would end up in a mortgage insured by the Federal Housing Administration (FHA) with a new mortgage balance adjusted to the house's current worth. The plan was limited to homeowners who qualify for a refinance -- in other words, those who are current on their mortgage.

$8.1 billion was set aside to provide loss protection for investors on the refinanced first liens. If losses occur on the new FHA refinance loans originated under the program, the owner of the loan (the investor) will always take the first 2.25% of loss. After that, FHA and the Treasury will share any remaining loss. The Treasury's share is limited to $8 billion in loss claims. If losses on these loans exceed $8 billion, then FHA will cover all losses thereafter.

The program also pays incentives to investors who agree to reduce or eliminate second mortgages for the homeowners whose first mortgages are refinanced. About $2.7 billion was set aside for that purpose, but it's included in the total allocated for Making Home Affordable.

In March 2013, Treasury extended the letter of credit facility to provide coverage for loans refinanced throughout the eligibility period, which had been extended to December 2014, but reduced the amount from $8 billion to $1 billion. Treasury believes this lower amount will be sufficient to accommodate any increased usage that could result through the close of the program. The figures in this line include administrative expenses associated with the letter of credit facility.

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The following list shows the 1 recipient of FHA Refinance Program.

Name State Date Entered Amount Committed by FHA-Re Amount Returned to FHA-Re
FHA Refinance Program Fund D.C. Sep. 3, 2010 $1,030,000,000