Is Obama Administration Pushing Mass Mortgage Refinancing Effort?
The few items I’ve seen in the last couple of days about a possible national refinance stimulus plan look an awful lot like the other trial balloons the Obama Administration floats into the ether of the web from time to time to see how an unorthodox idea might go over. This could be one of the better ideas to come out of this White House, mostly because it doesn’t allow the advisors who believe in making the public jump through as many procedural hoops as possible to invent yet another one of those useless borrower vetting process that have doomed HAMP and all of the other recent mortgage relief efforts.
A housing program that includes a massive mortgage refinance proposal – and a backdoor stimulus to boost consumer spending – is generating debate again in Washington.
At least that’s the word from Jaret Seiberg, analyst at MF Global Inc. , in his report Monday. Seiberg said it could be a proposal announced by President Barack Obama as part of a post-Labor Day address about jobs and the economy.
“The administration is desperate for ways to revamp housing. The one idea that doesn’t go away is a mass refinancing program,” he said in a report.
(Some analysts believe that the Federal Housing Finance Agency, which oversees government-seized housing giants Fannie Mae and Freddie Mac, could implement such a program on its own without statutory authority).
Massive housing re-fi program making waves, again
As I understand it, this really isn’t a refinance program in the sense that a borrower and a lender go through a process similar to the one the borrower did when they bought their home, with the attendant credit checks, appraisals, and employment verification. The idea being floated is more like one I described in Why Are Wall Street Bankers So Testy About Mortgage Forgiveness?, where you are essentially forcing bondholders to accept a reduced note rate in return for the possibility of a more stable stream of income.
Mortgage executives say the White House is finally realizing they cannot get the economy rolling again until they provide some payment relief for the estimated 11 million under water borrowers. “You are not going to have the kind of robust economic recovery that you need with so many homeowners struggling under this debt,” said Glen Corso, managing director of the Community Mortgage Banking Project.
White House Contemplating Major Refinancing Program?
There will be a massive pushback by political opponents and Wall Street. But I wouldn’t really worry about Wall Street. For all the howling that will go on about bond holders who are getting shafted, the top brass at our major money center banks will be secretly relieved that the government has helped them reduce the foreclosure rate and help shore up their balance sheets.