At the moment, about 11 million homeowners in the U.S. are underwater, owing more on their mortgage than their home is currently worth. President Obama and congressional Democrats have been trying to pass a refinancing plan that would allow homeowners to access historically low interest rates and maybe claw out from beneath their mortgages. But Republicans have, so far, balked.
So according to the Washington Post, Obama may forge ahead with a plan by executive order:
Obama is weighing whether to use his executive authority to give more of the country’s nearly 11 million struggling homeowners a chance to refinance at today’s ultra-low interest rates, according to the Treasury Department and others in talks with the administration on the issue.
Obama already has used his executive powers to make refinancing easier for people with loans backed by government-financed mortgage companies Fannie Mae and Freddie Mac. But the new plan could extend the opportunity to people who are underwater on their privately backed mortgages, which have not been eligible for the same relief.
The plan, if adopted, would likely be aimed at homeowners who have otherwise kept up with their mortgage payments but have been unable to refinance because the loan against their home exceeds its depressed value.
The Treasury Department hinted at this route last month when Michael Stegman said, “we will also consider non-legislative means at our disposal to help responsible non-GSE homeowners access these low rates. To be the most effective, as well as address investor concerns, the legislative route would be preferable to using existing Making Home Affordable program authority. Legislation would facilitate a refinance, whereas under our existing authority, Treasury could only modify the most deeply underwater loans and pay investors for some amount of forgone interest.”
It’s far preferable to pass one of the many proposals various members of Congress have put on the table to bolster refinancing programs, which would not cost taxpayers anything, according to an early analysis by the Congressional Budget Office. Meanwhile, millions of families would receive some help:
But in the meantime, forging ahead with a plan by executive order will at least do something for the millions facing an untenable housing situation.