Fannie Mae and Freddie Mac are permitted by their charters to let underwater homeowners refinance their loans without getting new mortgage insurance policies, James Lockhart, the director of the Federal Housing Finance Agency, said Friday.

The Obama administration's housing plan, unveiled last week, calls for Fannie and Freddie to allow refinancings by 4 million to 5 million such borrowers whose loans the government-sponsored enterprises already own or guarantee.

"The borrower need not obtain additional credit enhancement (such as private mortgage insurance) on a refinanced loan in excess of what is already in place for that loan," Mr. Lockhart wrote in a letter Friday to Suzanne Hutchinson, the executive vice president of the Mortgage Insurance Companies of America.

The refinance plan "fits within existing charter goals of providing market stability and assisting home ownership while meeting safety and soundness concerns," he wrote.

The GSEs' charters generally require them to obtain some form of credit enhancement for any loans they buy or guarantee that are worth more than 80% of a home's value.

Mr. Lockhart wrote that a refinancing borrower whose original mortgage had a loan-to-value ratio below 80% will not be required to obtain additional mortgage insurance — even if that ratio has since risen to 105% because of house price declines.

The credit risk to the GSEs "would be reduced because, after the refinance, the borrower would have a lower monthly mortgage payment and/or a more stable mortgage payment," Mr. Lockhart wrote.

Kevin D. Schneider, the president of the mortgage insurance trade group, said it was on board with the refi plan. "We support these efforts because they will help families maintain their homes," he said in a press release.

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