The Making Home Affordable program includes a new initiative – Home Affordable Refinance – to assist homeowners in refinancing their mortgages. The goal of Home Affordable Refinance, as announced by the President, is to "provide access to low-cost refinancing for responsible homeowners suffering from falling home prices."

The primary expectation for Home Affordable Refinance is that refinancing will put responsible borrowers in a better position by reducing their monthly principal and interest payments or moving them from a more risky loan structure (such as interest-only or short-term ARM) to a more stable product (such as a fixed-rate mortgage).

Fannie Mae’s Home Affordable Refinance initiative has three primary components:

Allow an LTV up to 105% on the new loan and additional underwriting flexibilities

Provide a solution for borrowers with LTVs above 80 percent who currently may not be able to refinance because of mortgage insurance (MI) coverage requirements: