Sen. Jeff Merkley, D-Ore., has introduced a proposal designed to help homeowners refinance their underwater mortgages, but without direct federal assistance.
Merkley's plan, which was presented in a white paper titled ‘The 4% Mortgage: Rebuilding American Homeownership,’ would create a temporary government-backed trust to purchase eligible mortgages issued by private lenders. The trust would be funded by the federal government's sale of bonds to investors to raise funds. Merkley calls for the plan to be piloted immediately by a federal housing or regulatory agency, thus avoiding the needs for new legislation from Congress.Â
‘There are millions of Americans trapped in high-interest mortgages, and that's not just bad for them – it's bad for neighborhoods hit by foreclosures, and it's a huge anchor on our economy,’ says Merkley. ‘A bold solution to help these families refinance is the fastest way to get our economy back on track.’