In the latest President's job speech, he briefly mentioned his plans on the housing market. Obama said that, "We're going to work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4%,” according to Bloomberg report.
Edward DeMarco, acting Director of Federal Housing Finance Agency or FHFA, which regulates Fannie Mae and Frediie Mac, said he is working with the administration on how to implement a mortgage relief program.
The refinancing plan would allow certain borrowers to refinance loans that are backed by government owned Fannie Mae and Freddie Mac or the Federal Housing Administration.
The idea is to help struggling borrowers refinance at current low interest rates, which would cut their monthly payments and free up cash for spending. The hope is that with cash available for spending, it will boost business activity. The current average mortgage rate on a 30-year fixed loan is 4.16%, while the 15-year fixed loan is at 3.37%.
According to Bloomberg source, FHFA officials met with mortgage industry executives to discuss possible changes to Home Affordable Refinancing Plan or HARP last Friday, September 9. No details were revealed as to what was the outcome of that meeting.
Two years ago, the Obama administration set up a program called the Home Affordable Refinancing Plan or HARP which provides access to low-cost refinancing for responsible homeowners suffering from falling home prices. Also, Home Affordable Modification Program or HAMP has permanently reduced monthly payments for fewer than one million home owners. Both programs still remain open.
There are no clear guidelines on how the new mortgage plan will be carried out or when it will be carried out. But according to Senator Barbara Boxer, the new mortgage plan would provide a "dual benefit" to the home owners, Fannie Mae and Freddie Mac. Since fewer borrowers would fall delinquent while providing a boost to the economy.
If you want more information about the new mortgage plan, you may check out http://www.msnbc.msn.com/id/44340713/ns/business-real_estate/ for more details.
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