The White House is taking steps to expand and improve on a its lack-luster 2-year-old home refinancing program in order to reach far greater numbers of homeowners in need of lower interest rates.
According to the New York Times, in an article on Saturday, September 10th, 2011, President Obama announced this new effort last week, as part of his package of measures that aim to boost job creation across the country. By coming to the aid of stressed, though responsible homeowners, the government believes reduced monthly mortgage payments would kick-start economic recovery as dollar savings are spent on other items.
The Home Affordable Refinance Program was initiated to support homeowners unable to qualify for loans from private mortgage companies. Fannie Mae and Freddie Mac (government owned) offered loans at lower rates to individuals with mortgage debts as much as 125% of their home value.It had been assumed that millions of American homeowners would take advantage of the program, though in part due to tumbling home values, large fees and rigid income requirements, less than one million mortgages were refinanced by the program by June of this year.
Officials were reported as saying on Friday that a range of issues were currently under review, with new guidelines being expected to be announced in the next few weeks. As economists point to the housing market in a sluggish economy, business and consumer advocates have apparently pushed the President to re-implement a new and improved Home Affordable Refinance Program , despite considerable opposition by Republicans. The Congressional Budget Office reportedly calculated that financial implications of the program could well cost the country some $600 million, while saving homeowners avoid default to the tune of $7.4 billion in the first year.
The New York Times reported that President Obama was clear to point out that reforms were intended only for ‘responsible’ homeowners. The President also proposed investing some $15 billion to rehab foreclosed and vacant properties to boost construction employment and rejuvenate blighted community neighborhoods.