Housing got only a brief mention in President Obama’s highly anticipated jobs speech Thursday night. But it was a pledge that some pundits say is finally a step in the right direction. Others say it’s likely to have little impact. Obama told Congress that his administration is going to work with federal agencies to refinance millions of homeowners’ mortgages at today’s record-low rates. With those rates now near 4 percent, the president says the move could “put more than $2,000 a year in a family’s pocket, and give a lift to an economy still burdened by the drop in housing prices.” While the specifics have not been released, it’s expected that the program will make homeowners with government-backed mortgages eligible for new, lower-rate, lower-payment loans even if they are underwater or have bad marks on their credit as a result of financial hardship. The Congressional Budget Office (CBO) released a paper just one day before Obama’s speech outlining the impact of such an extensive refinance program. The agency analyzed a “stylized large-scale mortgage refinancing program” that would relax current income and loan-to-value restrictions for borrowers who wish to refinance and whose mortgages are backed by Fannie Mae, Freddie Mac, or the Federal Housing Administration. CBO concluded that the specific program analyzed is estimated to lead to an additional 2.9 million mortgage refinancings, resulting in 111,000 fewer defaults on those loans and estimated savings for the GSEs and FHA of $3.9 billion on their credit guarantee exposure. Offsetting those savings, however, CBO says federal investors in the mortgage-backed securities holding those loans – including the Federal Reserve, Treasury, and GSEs – would experience an estimated fair-value loss of $4.5 billion. Based on these figures, CBO says the estimated cost to the federal government for a refi program of this magnitude would be $600 million. For private investors, the costs run significantly higher. CBOsays they would experience an estimated fair-value loss of $13 to $15 billion. Most of that wealth would be transferred to borrowers, the report notes. CBO concludes that the benefits of a 4-percent-rate, government-led refi boom would be “small” relative to the size of the housing market, the mortgage market, and the overall economy.Obama Pledges to Refinance Millions of Mortgages at Today's Rates
09/08/2011BY: CARRIE BAY
About Me
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Gerard Scheffler- Default and Distressed Property Sales Expert (773) 909-3346
www.chicagolandhomegallery.com - Park Ridge, Illinois, United States
- Gerard Scheffler has been very actively involved in the real estate profession for over seven years. In 2005, immediately after receiving his Broker’s License, he established his first Chicago based brokerage company. The company turned out to be very successful with hundreds of satisfied customers and millions of dollars in closed real estate transactions. Over the years, Gerard has developed a network of returning customers who always refer his services to their family and friends. He is presently a managing broker at Home Gallery Realty brokerage firm specializing in default and distressed property sales. Regardless of his professional development and success, Gerard is constantly looking for ways to improve his skills as well as build his company image and reputation. He is very hardworking and aggressive when it comes to representing his customers ‘ real estate needs and doing his job right. He will work with you to ensure that your property is sold for the highest price possible in the shortest amount of time with the least amount of inconvenience to you. Area of service includes Cook, DuPage, Kane, Lake and Mchenry County in the State of Illinois.
Friday, September 9, 2011
What is your take on this action ? Would you believe that the lenders will refinance the borrowers with lates on the credit score ?
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