Many are still struggling with owing more on their home than the home is worth. In general, refinancing those kind of mortgages have been difficult as no bank in their right mind will agree to lend you more than your home is worth… Hence, the government has stepped in and agreed to take on some of that risk.
On March 15th the Home Affordable Refinance Program will be relaunched with new guidelines. You can use any participating lender and the new rules allow you to refinance up to 125% of the home value for the primary loan (the secondary loan will not be refinanced – but the secondary loan has to agree to participate by subordinating.) Another big thing for some – investment properties and second homes are now eligible.
One limitation is that the home has to be with Fannie Mae or Freddie Mac. To check that, visit http://www.makinghomeaffordable.gov/tools/does-fannie-or-freddie-own-your-loan/Pages/default.aspx . You must also be current on your mortgage with no more than 1 late payment over the last 12 months and FHA loans do not qualify.
For some this program may be a great option to doing a short sale or a foreclosure.