In his scheduled speech on job creation this Thursday, President Obama is likely to “include a nod” to his latest mortgage relief plan according to sources familiar with the administration’s plans. The administration has been gathering data and garnering opinions for weeks on a refinancing initiative designed to help borrowers refinance the loans on their homes at current low rates if those loans are backed by Fannie Mae, Freddie Mac or the FHFA. However, the administration has not yet determined if borrowers seeking a loan of more than 80 percent of the value of their home would qualify for the refinancing. If not, then the program will likely not reach many of the homeowners in the greatest danger of foreclosure.
Of course, if the plan goes through, the holders of the mortgage bonds that are being paid off early will take a hit. “It’s a political hail Mary,” said head of securitized products at Denver’s Janus Capital Group John Kerschner, who does not believe that the economy will derive any significant net benefits from a government-encouraged refinancing wave. However, proponents of the program say that currently the housing market is dead in the water because “homeowners without a job or good credit histories have been essentially shut out of the refinancing process.” Supporters of the plan like William Galston, a scholar at the Brookings Institution think tank, says that the plan might “jump start” the housing recovery by helping households work off their debt burden more quickly than if things take a natural, gradual course.
Do you think that refinancing should be an option for more people than it is currently? Should the government be involved in that decision?
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