Thursday, August 25, 2011

Possible Housing Proposals: New Refinance Plan and Rental Program

by Calculated Risk on 8/25/2011 12:10:00 AM

From the NY Times: U.S. May Back Refinance Plan for Mortgages (ht Ann)

One proposal would allow millions of homeowners with government-backed mortgages to refinance them at today’s lower interest rates, about 4 percent, according to two people briefed on the administration’s discussions ...

Administration officials said on Wednesday that they were weighing a range of proposals ... They are also working on a home rental program that would try to shore up housing prices by preventing hundreds of thousands of foreclosed homes from flooding the market. ...

But refinancing could have far greater breadth, saving homeowners, by one estimate, $85 billion a year. Despite record low interest rates, many homeowners have been unable to refinance their loans either because they owe more than their houses are now worth or because their credit is tarnished.
This is a recycled suggestion that Tom Lawler criticised last year. There is a already program to do this called Home Affordable Refinance Program (HARP) that wasn't very successful.