Today, America has an estimated 10.9 million underwater homeowners, all of whom are desperate for a way to alleviate their financial burdens. With 30-year mortgage rates at 4.09 percent, the lowest rates in at least 50 years, it would seem like the perfect time to refinance. Yet, so many homeowners are sitting on property that has depreciated dramatically in value, that the majority of struggling homeowners cannot actually qualify for mortgage refinancing.
In order to assist such homeowners, President Barack Obama and his supporters have developed the Home Affordable Refinance Program. Since it was first established two years ago, the program has already helped 838,000 Americans to lower their mortgage payments. However, this is only a small proportion of those who need help.
New Plan to Complement Federal Efforts
In an effort to ameliorate this situation, Obama has announced a new proposal wherein the federal government will work with housing agencies to help ensure that more Americans can refinance their mortgages at the current low rates. Obama estimates this new plan will help each individual family to pocket at least $2,000 more per year.
This plan will build on the existing Home Affordable Refinance Program and direct Obama’s economic team to work closely with Fannie Mae and Freddie Mac, as well as with banks and regulators. The federal government hopes that this plan will help borrowers and their communities by keeping more borrowers in their homes. It also ought to assist taxpayers by reducing the burden to Fannie Mae and Freddie Mac.
While in many ways this proposal is a step in the right direction, but to many housing activists it is too little too late. However, until the plan is implemented it is impossible to tell whether this will be the proposal that will finally help mortgage holders, or if it will simply be another lukewarm response to a growing national problem.