President Obama has been scrambling to pass a jobs bill that will, hopefully, tackle the unemployment problem and spur the American economy. But unemployment isn’t the only area of economic growth he is targeting.
As part of his jobs speech, the President also discussed his desire to help Americans save money on their mortgages and help reduce the threat of foreclosure for many families.
President Obama announced, “To help responsible homeowners, we’re going to work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent.” Political officials from both sides applauded in agreement that steps must be taken to help those at risk of becoming owners of underwater mortgages.
In the past, millions of American homeowners were not eligible for such low refinancing rates, missing out on more than $2000 a year in savings. However, with government spending already at an all time high, many are wondering how the government intends to fund such concessions.
One solution isn’t to fund gaps in lending, but to lift certain restrictions currently in place on refinancing options. The idea would be to let people qualify for a loan to refinance even if they (a) owe more than their homes are worth and/or(b) have credit scores below the current lending standards.
The plan would not only provide homeowners with much needed mortgage relief without costing taxpayers additional money for government spending, but would even save taxpayers money by reducing foreclosures that could end up requiring a bailout for entities like Freddie and Fannie.