Obama Wants You to be Able to Afford Your House Again
Refinancing government-backed mortgages could save money and reduce the deficit.
The Obama administration is looking at ways to help Americans be able to afford their houses again, The New York Times reports. Obama is looking into new ways to strengthen the housing market, and a leading idea is to allow homeowners with government-backed mortgages to refinance their homes at today's lower interest rates. Holding them back at this point are how investors, and Fannie Mae and Freddie Mac's regulator might react. But the chief economist with Freddie Mac told the Times the plan could inject some confidence into the market.
There are other ideas on the table, but one estimate says homeowner refinancing could save everyone $85 billion per year. It would also help people who weren't able to refinance their debt, "either because they owe more than their houses are now worth or because their credit is tarnished." The plan the administration goes with must ultimately, "plans must help a broad swath of homeowners, stimulate the economy and cost next to nothing." The Times explains why refinancing is likely the way to go. It could even chip away at the federal deficit:
The idea is appealing because it would not necessarily require Congressional action. It also would not tap any of the $45.6 billion in Troubled Asset Relief Funds that was set aside to help struggling homeowners. Only $22.9 billion of that pool has been spent or pledged so far, and fewer than 1.7 million loans have been modified under federal programs. But Andrea Risotto, a Treasury spokeswoman, said whatever was left would be used to reduce the federal deficit.