Presidential election years are always interesting as the vote sway machine kicks into high gear.
During President Obama’s State of the Union address on Tuesday evening administration, he briefly mentioned a new plan to help underwater homeowners whose loans are NOT owned by Fannie Mae or Freddie Mac and therefore do not qualify for the new HARP 2.0 refinance program.
“I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low rates. No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won’t add to the deficit and will give those banks that were rescued by taxpayers a chance to repay a deficit of trust.”
Supposedly this is going to happen in the next couple of weeks.
I do not have any details at this point but it sounds like the President may be suggesting that FHA be used to refinance homeowners under a streamline type of program to reduce rates for responsible, upside down homeowners that have stayed current on their mortgage payments.
I’m not super excited about the whole “small fee on the largest financial institutions” part. Last time he levied a small fee on banks, with the passing of H.R. 3756, we saw an immediate jump in interest rates independent of normal market fluctuations. That’s right….the banks passed the fee straight on through to the consumer.
Any proposal the President comes up with still has to make it through Congress.
There are two things we know about Presidential election years, “say anything to get elected” rhetoric flows like Niagara, and Congress stonewalls making any important decisions as a shift in power is anticipated by both parties and nobody wants to go out on a limb to support something the other party supports for fear of ticking off their constituents.
We’ll see. My hopes are not high but I am optimistic.
What do you think about this proposal? Is a lower interest rate enough to make you feel better about owing more than your home is worth? Is this enough to help the economy recover?
I would love to hear your opinion below.