Feds Eye a Fresh Round of Mortgage Relief
Refinancing could take on loans not backed by Fannie, Freddie
By Mark Russell, Newser Staff
Posted Dec 26, 2012 8:14 AM CST
In this Nov. 14, 2012, photo, a woman walks towards a home for sale during a viewing for brokers in Leucadia, Calif.   (AP Photo/Gregory Bull, File)

(Newser) – The White House is looking to roll out a fresh round of refinancing, this time adding mortgages that aren't backed by the government, reports the Wall Street Journal. Some 22% of mortgages—about 10.8 million—exceeded the value of the homes they backed in June, down sharply from 12.1 million at this time last year, but still a serious drag on the economy. The CBO estimates that refinancing could save a homeowners about $2,600 annually, although only about 5% of all mortgages would likely be eligible.

By getting swamped homeowners out from overwhelming debt, the hope is families will be able to spend elsewhere and boost the economy. Current measures, introduced in October 2011, have so far helped 330,000 homeowners. "It has been unbelievably successful," said the head of the mortgage-backed securities group at Pacific Investment Management Co. However transferring thousands of mortgages to government-backed mortgage companies will require congressional approval to change Fannie's and Freddie's charters, a move the mortgage industry is skeptical about without more guarantees. Given Fannie and Freddie's poor track record of pricing high risks during the bubble, asks one skeptic, "what gives us the belief they can price it better today?"

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Showing 3 of 10 comments
JimW
Dec 26, 2012 12:37 PM CST
2G is chump change in the overall scheme of things. I don't think it would make even a small dent in the economy.
DougMasters
Dec 26, 2012 11:08 AM CST
""what gives us the belief they can price it better today?"" ............ well, between these 4 walls and I They can't
No-Left-Turn
Dec 26, 2012 8:30 AM CST
Another government shell game. This may help individual homeowners, but it will do nothing for the economy overall. If a homeowner pays $2,000 less per year in house payments, someone will get $2,000 less in interest. Zero sum game. Duh!!! Same deal with the Fed's zero interest rates. Some people can borrow more cheaply. Savers are paying the price. Ask retirees how much extra spending money they have under Bernanke.