The Obama Administration is rumored to be about to reveal a new program for mortgage relief next week, in order to decrease foreclosure numbers and help homeowners stay in their homes, reports Reuters.
Details of the new proposal remain a closely guarded secret, but the speculation is that President Obama is set to unveil a new plan that helps more borrowers to obtain refinancing loans, reducing monthly mortgage repayments and allowing them to stave off foreclosure.
Reportedly, the plan is targeted to those homeowners who have taken out mortgages through Fannie Mae and Freddie Mac, or those with loans backed by the Federal Housing Administration, which will assist thousands of people who have been unable to refinance their mortgages so far.
The reasoning goes that by reducing monthly repayments for homeowners, more consumer cash will be freed up to help stimulate the US economy. Currently, interest rates are close to a fifty-year low, with the average 30-year fixed loan rate being just 4.22% last week, yet many homeowners have been unable to take advantage of this and refinance, due to unemployment, poor credit or simply owing too much on their mortgage.
It’s thought that the FHA, Fannie Mae and Freddie Mac, who account for a combined 90% of all residential mortgages in the US, will be granted permission to offer borrowers who are up to date with their mortgages the chance to refinance. Up till now, refinancing has only been available to those who have defaulted on mortgage payments.