In mid-2012 the Obama Administration revamped the Home Affordable Refinancing Program to include eligibility for more borrowers.
According to Capital Economics, this was very beneficial for the housing market. In the three months after HARP 2.0 was introduced, the average number of refinances each month rose from 30,000 to more than 100,000. This was largely because of the revision that allowed borrowers with loan-to-value ratios greater than 125 percent to refinance.
"We were originally skeptical, but we have to admit it has made a significant difference," said Paul Ashworth, economist at Capital Economics.
About half of all refinances under HARP 2.0 have been completed by borrowers with an LTV of more than 105 percent, while a quarter of them have been done by borrowers with LTVs greater than 125 percent.
This program has helped many borrowers get out of negative equity on their homes, but Ashworth said this is still a major problem in the United States. He said the almost half of all mortgage borrowers still don't have the 80 percent home equity to qualify for standard refinancing, which could slow the housing recovery.