The Obama administration has presented the mortgage refinancing plan that was first announced during the president's State of the Union speech on Jan. 24. According to a statement released by the White House, the plan will encompass a mix of loan modification strategies and initiatives to stabilize neighborhoods.
A keystone of the plan is an effort to help ‘responsible borrowers’ whose mortgages are not with the government-sponsored enterprises (GSEs) save an average of $3,000 a year through refinancing.
‘The president's plan will provide borrowers who are current on their payments with an opportunity to refinance and take advantage of historically low interest rates, cutting through the red tape that prevents these borrowers from saving hundreds of dollars a month and thousands of dollars a year,’ said the White House. ‘This plan, which is paid for by a financial fee so that it does not add a dime to the deficit, will provide access to refinancing for all non-GSE borrowers who are current on their payments and meet a set of simple criteria; streamline the refinancing process for all GSE borrowers who are current on their loans; [and] give borrowers the chance to rebuild equity through refinancing.’
The plan also includes a ‘Homeowner Bill of Rights’ that is designed to offer ‘a single set of standards to make sure borrowers and lenders play by the same rules.’ However, it is not clear whether this will require congressional approval.
The White House announcement included several endeavors that were previously put forward, including a pilot program by the Federal Housing Finance Agency to transition foreclosed properties into rental housing, a new probe of mortgage originators and securitizers by federal and state agencies, new policies enacted by the GSEs to provide a full year of forbearance for borrowers looking for employment, and the enhancement of the Home Affordable Modification Program.