Obama’s New Refinance Program
In his State of the Union speech, Tuesday evening, President Obama announced a new mortgage refinancing program that would expand the government’s Home Affordable Refinance Plan (HARP).
While short on details, the plan would supposedly allow homeowners to refinance their mortgages at today’s low rates.
This is interesting because the vaunted new HARP 2.0 refinancing program essentially offers the same concept.
Critics have been quick to weigh in on the program, pointing out that it would only apply to borrowers whose loans are NOT guaranteed by FHA, Fannie Mae, or Freddie Mac.
I am left wondering how this would work, given that FHA, Fannie, and Freddie hold the majority of all existing mortgage loans.
The program would be funded by additional “small upfront fees”, charged by the lenders.
Given that there’s no free lunch, those small upfront fees (just how small would they be?) would be passed on to borrowers, which would increase their cost of borrowing, thereby making it more difficult to qualify for refinancing.
But wait, we could add those small upfront fees to the loan and end up with the borrower even deeper underwater!
Source: DSNews.com article
January 26th, 2012 Posted in Inside Real Estate |
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