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You don’t hear much about the Federal refinancing effort these days. In what started out as the focal point of the Treasury’s two-pronged attack on the housing crisis, soon became dwarfed by the rescue’s other facet: modification.

So why haven’t we heard much about the Making Home Affordable refinancing program lately? Perhaps it’s because the program isn’t doing well, or perhaps because the audience that it was designed for is opting for other solutions besides refinancing.

HUD Secretary Shaun Donovan announced this afternoon that Fannie Mae and Freddie Mac will now begin refinancing loans with a loan-to-value (LTV) of up to 125% under the Home Affordable Refinance program. Federal officials have concluded that by expanding the eligibility of the effort, more underwater homeowners will be able to refinance, spurring the recovery of the housing market:

“This decision is part of our ongoing efforts to maximize the effectiveness of the Making Home Affordable program and adapt to an ever-changing housing market,” said Treasury Secretary Tim Geithner. “By expanding refinance eligibility, we can bring relief to more struggling homeowners more quickly. It’s a crucial step in our broader efforts to get America’s housing market and economy on the path to recovery.”

Last week we reported how Fannie Mae and Freddie Mac’s boss, the Federal Housing Finance Authority (FHFA), was considering whether or not to expand the Home Affordable Refinance Program (HARP) by refinancing loans with an LTV of over 105%. The program’s apparent lack of success has regulators scrambling to find ways to help more homeowners:

“We’re actively considering how to structure a program that makes sense over 105 percent,” Federal Housing Finance Agency Director James Lockhart said yesterday. He said a ratio of 125 percent “is a number” that’s on the table, though “not necessarily the number we’re going to end up with.”