One More New Attampt To Help Underwater Homeowners

February 2, 2012


President Obama proposed yesterday a refinance program to make it easier for homeowners to take advantage of today's low interest rates. The proposal would allow almost anyone that has a credit score of 580 and above and who has been paying with their monthly mortgage payments on time for the past six months to refinance their loans. Loans would have to be in the range of $271,050 and $729,750.


The proposal is another attempt to address the large number of homeowners who have mortgages with higher interest rates or balloon payments. As far as I can tell from the news releases, it does not directly address the issue of loans that are greater than the current value of the home. It would simply reduce the payments through a reduction of the interest rate on the loan.


Previously, there was a proposal for all loans held be Fannie Mae or Freddie Mac to be eligible for this refinancing. This proposal extend this program to loans owned by banks and investors that were not sold to Fannie and Freddie.


As usual, this proposal would need to be enacted into law by both congressional bodies.