The Home Affordable Refinance program will now accept applications if you are up to 25% under water on your mortgage; that’s up from the previous limit of 5% under water.

As I wrote in an earlier Scoop that explained how Home Affordable works, if you have a mortgage that is either backed or held by Fannie Mae or Freddie Mac, and you are still on-time with the payments, you may be able to refinance into a low-rate mortgage to help you stay in the home. When the program was launched in the spring your mortgage could be as much as 105% of the home’s current value (or to put it another way, you could be 5% under water) and still be eligible for the program But the government realizes that it needs to reach more people at risk of losing their home, so it has now expanded the acceptable loan-to-value (LTV) to 125%.

What to Do:
If you have were already turned down for a Home Affordable refinance because your LTV was too high, I want you to go back and try again. Make sure the lender knows about the new rule. Hey, print out this official release  and show them.

If you hadn’t bothered to try and refinance because you knew your mortgage was over the old 105% limit, well, now’s your chance.

Here’s where to get started:

• To learn more about Home Affordable, check out this government website http://www.makinghomeaffordable.gov/ that can help you understand whether you are a candidate for the HASP refinance or modification programs.
  
• To find out if your loan is backed or owned by Fannie or Freddie, start here:
  
  For Fannie Mae:
  1-800-7FANNIE (8am to 8pm EST).
  www.fanniemae.com/homeaffordable
  
  For Freddie Mac:
  1-800-FREDDIE (8am to 8pm EST)
  www.freddiemac.com/avoidforeclosure