Government contemplates mortgage refinance plan

Since the housing bubble burst, Americans have implored the federal government to take action and create a program that would lessen the burden of high interest rates and mortgage payments, protect against foreclosure, and keep homeowners in their homes. And although the government has attempted a few such programs, the results of those initiatives have been mixed, at best. Lawmakers have yet to propose a program that will help homeowners on a large scale while also making long-term repairs to the battered housing market.

However, in recent days there have been rumors of a new program that, if implemented, would likely provide relief to millions of people in Georgia and throughout the country who are finding themselves unable to make their high mortgage payments. According to an unnamed Obama administration insider, the proposed program would permit homeowners with government-backed mortgages to refinance their home loans at the current record-low interest rates of around 4 percent.

This option would provide a tremendous benefit to the many homeowners who are currently unable to refinance their mortgages because they owe more on their homes than they are worth. One economist estimates that the program could save homeowners approximately $85 billion per year. This, in turn, will likely stimulate the economy, as homeowners will have more money to spend every month.

However, the program remains a rumor at this point. If officially proposed, the program could be met with opposition from investors in government-backed mortgage bonds, as well as from the regulator who oversees Fannie Mae and Freddie Mac. Hopefully, though, the government will be able to overcome that resistance and implement this program for the good of American homeowners.

Source: New York Times, “U.S. May Back Refinance Plan for Mortgages,” Shaila Dewan and Louise Story, August 24, 2011