Obama Seeks To Refinance More Underwater Mortgages
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According to various reports, the Obama administration is stepping up their efforts to stem foreclosures and will start refinancing mortgages with a loan-to-value of as much as 125% through Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). The previous loan-to-value was 105%.
President Obama's Making Home Affordable program sought to help up to 5 million mortgage holders refinance, but to date only 80,000 have been refinanced.
The program only applies to mortgages owned or guaranteed by Fannie Mae and Freddie Mac, which encompasses 56% of all mortgages outstanding.
In addition, the 'Enterprises' are also incenting these borrowers to combine a lower mortgage rate with a faster amortization schedule, which will enable them to get 'above water' on their mortgages more quickly. The program provides borrowers with an incentive to reduce the term of their loan from 30 years to a shorter-term, fixed-rate mortgage and therefore pay down the principal more quickly and reduce lifetime interest payments.
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Justme on Jul 1, 2009 11:13 PMthey need to do something about jumbos. This is the next wave of forclosures. They need to get ahead of the problem, they are still months and months behind.