An article in today's Wall Street Journal notes that the government has expanded the eligibility for refinancing relief for homeowners current on their mortgage payments who owe more than their home is worth up to 125% of the homes value under the Making Home Affordable program. This program provides government assistance in refinancing conventional mortgages backed by Freddie Mac and Fannie Mae. Response to this program, orginally intended to help 4 to 5 million homeowners with refinancing, has thusfar been weak. The Journal article noted that in mid June only 20,000 people had used the program to refinance.

A recent blog article in the Journal ("When is it Cheaper to Ditch a Home than Pay") discussed that one in four foreclosures results from strategic defaults by homeowners able to make payments but unwilling to pay on a loan for far more than the value of their homes. Our understanding is that the Making Home Affordable program assists homeowners in lowering their payments but does not address the loss of equity when the home's value drops below that of the mortgage.