HARP 2.0 Stirs Hope, and Frustration, for Homeowners Peter Wynn Thompson for The New York Times Terrence Janas bought a two-bedroom condominium in Oak Park, Ill., in 2008. His $237,000 mortgage is far underwater; it's now 158 percent of what his home is worth. As mortgage rates have hit one record low after another, millions of homeowners have been forced to watch, longingly, from the sidelines. They haven't had the option of refinancing because sliding home values pushed their mortgages underwater, meaning they owe more than their homes are worth. The banks would just not work with them. Yet many of these borrowers are gainfully employed, have solid credit histories and have never missed a mortgage payment. And they want to stay in their homes - even if those homes are worth substantially less than they paid. These are the families that President Obama and other political leaders like to call "responsible" homeowners. The government's initial effort, back in 2009, to ease refinancing rules to include them was underwhelming. Now, though, there may be reason for some guarded optimism, as the machinery for a new and improved government refinancing program is finally up and running. And this glimmer of hope for underwater homeowners - as well as borrowers with only a small sliver of home equity - has resulted in a rush of loan applications (even if they are unlikely to secure the lowest, rock-bottom interest rates). "The updated program is still far from perfect, but most people, both consumers and those in the mortgage industry, would say it's a huge improvement from what we had in the past," said Guy D. Cecala, publisher of the newsletter Inside Mortgage Finance. But the bar was very, very low with the old program. The rules for the initial program were restrictive. Partly as a result, only a little more than a million borrowers were helped, far short of the four million to five million initially predicted. So the government tried again, announcing the second iteration of the Home Affordable Refinance Program last fall - called HARP 2.0. It's too soon to tell whether this latest version will be more successful or whether it, too, will end up in the dust bin of homeowner programs that overpromise and underdeliver. From the perspective of big banks, borrowers have reason to be hopeful, though they need to be patient. The banks have been inundated with HARP applications - accounting for about 60 percent of all current refinancing applications at Bank of America and 40 percent at Wells Fargo - because of pent-up demand. Many institutions have added staff to handle the volume, and they have a big incentive to keep them motivated: analysts say they stand to make a tidy profit on the business. But some homeowners and mortgage brokers are telling another story: one of frustration and still more obstacles. They say they've found that the program's rules on paper don't necessarily translate to the real world. One of them is Terrence Janas, a 31-year-old software engineer, who bought a two-bedroom condominium in Oak Park, Ill., in 2008 for $280,000. Two virtually identical units recently sold for $150,000; one was a short sale. That has pushed his $237,000 mortgage far underwater; it's now 158 percent of what his home is worth. He has a healthy income, a credit score of about 760, and simply wanted to reduce his 6 percent mortgage rate. "HARP was designed to help people in my situation," said Mr. Janas, who has been trying to refinance for more than a year. So why was I unable to take advantage of it? He said his application was denied by his current lender, GMAC, and about five others. Their reasons ran the gamut. GMAC told him it was because he had lender-paid mortgage insurance. Another told him that his "loan-to-value ratio" was too high - that is, the loan amount, divided by the home's value - even though HARP 2.0 eliminated the cap. Previously, only borrowers with ratios of 125 percent or less, meaning they owed 25 percent more than their homes were worth, could refinance. Another told him he was not eligible for an appraisal waiver, and would need to get one showing that the property was worth at least $206,000, which Mr. Janas knew was unlikely. But he is still trying, and is now working with a smaller lender who is more optimistic about his prospects. "I haven't given up," said Mr. Janas, who is getting married next month and would like to pocket the $400 a month he expects to save with a lower rate. Still, the number of success stories is edging higher. In the first quarter, HARP loans accounted for about 14 percent of all refinancing activity on loans backed or owned by Fannie Mae or Freddie Mac, according to Inside Mortgage Finance. That's up from about 12 percent of refinancing activity for each of the last two years. According to the Federal Housing Finance Agency, Fannie and Freddie's regulator, HARP 2.0 has only been fully available since mid-March, "and the early results are dramatic," said Meg Burns, a senior associate director at the agency. About 180,000 loans were refinanced through the program in the first quarter, nearly double the 93,000 loans in the fourth quarter of 2011. Refinancing among borrowers with loans that are more than 105 percent of their home's value has increased to 41,000 during the first quarter, up from 13,000 in the fourth quarter. So how can you gauge your chances of refinancing your mortgage through the HARP 2.0 program?