About 2.3 million homeowners could have refinanced their
mortgages last year if they didn't owe more than their homes
were worth or if lending standards weren't so strict, according
to a Federal Reserve study released yesterday. Long-term
mortgage rates are near record lows and have been below 5% for
all but two weeks this year. The average rate on a 30-year fixed
loan is now 4.09%. But lenders typically require homeowners to
have equity in their homes to refinance. And many lenders are
approving only borrowers with high credit scores. Roughly 22.5%
of homeowners, or about 11 million, are "underwater" — they owe
more than their homes are worth — according to CoreLogic, a real
estate data research firm. The figures don't show how many of
the homeowners obtained loans during the housing boom, when
lending standards were often lax. Many lenders offered loans to
people with poor credit, no employment checks and little or no
money down. The Fed said about 4.5 million refinancing
applications were approved last year. In a healthy housing
market, that figure would be nearly 34% higher, it said.

The Federal Housing Finance Agency has said it's reviewing a
program it launched two years ago to see if it might be expanded
to let more homeowners qualify. The program, called Home
Affordable Refinance Program, or HARP, lets people whose homes
are underwater by up to 20 % refinance at lower rates. But to be
approved for the program, homeowners must be current on their
mortgages, which must date from 2009 or later. As of July, about
838,000 homeowners had refinanced through the program. Officials
had hoped at least 4 million Americans would take advantage. The
Fed's study reviewed information from more than 7,900 lenders.
The number of approved mortgages fell from nearly 9 million in
2009 to fewer than 8 million in 2010. The peak was 15.6 million
in 2005.