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Obama administration to relax HARP standards

In this photo illustration a house key sits on a mortgage application form.

Steve Chiotakis: President Obama travels west today to Nevada, where he'll unveil some new measures that the White House says will help struggling homeowners -- and won't have to be approved by the Congress.

Nevada was hit hard by the housing bust; 60 percent of homeowners there are underwater, or owe more than their houses are worth. The plan allows those mortgage holders to borrow money -- at a smaller interest rate -- even if the home has negative equity.

Marketplace's Nancy Marshall-Genzer is with us live from Washington with the latest on this story. Good morning Nancy.

Nancy Marshall-Genzer: Hey, good morning Steve.

Chiotakis: So tell us more about this program.

Marshall-Genzer: The Obama administration is loosening the rules for this program. It's called the Home Affordable Refinance Program, or HARP. Since 2009, it's helped fewer than a million home owners. So now, the rules of the program are being relaxed; as you mentioned -- if you qualify, no matter how far you are underwater. And you may not have to get an appraisal of your house.

Chiotakis: And how many homeowners is this gonna help, Nancy?

Marshall-Genzer: The Obama administration won't give out any numbers this morning.

But Mark Zandi, the chief economist at Moody's Analytics, says that more than a million homeowners could refinance. Now Steve, compare that to the estimated 11 million homeowners who are underwater -- it kind of puts this in perspective.

But those lucky few that can refinance will save a nice chunk of cash. Shaun Donovan, the secretary of housing and urban development, did the refinancing math during a White House conference call this morning.

Shaun Donovan: This means, typically, a savings of $2500 a year or more for these families. It's the equivalent of a substantial tax cut.

And Steve, getting back to the number of people that could be helped by this, Mark Zandi told me there's no silver bullet. We just have to take a series of these small steps to help stabilize housing.

Chiotakis: Small steps -- is this gonna help with the problem of foreclosures?

Marshall-Genzer: Maybe. But this program isn't for people who are facing foreclosure because they're behind on their mortgages. There are still some pretty strict requirements borrowers are going to have to meet: you have to have a job, you have to be current on your mortgage payments. And you have to find a bank to work with.

I talked to Guy Cecala about this. He's publisher of Inside Mortgage Finance. He says the new rules announced today don't give banks enough of an incentive to refinance a loan.

Guy Cecala: Borrowers have to ask lenders for this specific program. They say I've heard about this HARP program, what can you tell me about it? And the average loan officer doesn't even know anything about it.

So, Steve, there are still lots of hurdles to refinancing. Some people will be helped by the new rules, but certainly not everybody.

Chiotakis: Marketplace's Nancy Marshall-Genzer, reporting from Washington. Nancy, thank you.

Marshall-Genzer: You're welcome.

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