President Obama last night called on Congress to make it easier for families to refinance their mortgages. Noting that many eligible families are having a hard time refinancing, Obama urged Congress to pass a bill as soon as it can that would ease the process and open up refinancing to those currently blocked out:
Part of our rebuilding effort must also involve our housing sector. Today, our housing market is finally healing from the collapse of 2007. Home prices are rising at the fastest pace in six years, home purchases are up nearly 50 percent, and construction is expanding again.
But even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected. Too many families who have never missed a payment and want to refinance are being told no. That’s holding our entire economy back, and we need to fix it. Right now, there’s a bill in this Congress that would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today’s rates. Democrats and Republicans have supported it before. What are we waiting for? Take a vote, and send me that bill.
The bill in question is one proposed by Sens. Barbara Boxer (D-CA) and Robert Menendez (D-NJ). Housing policy expert John Griffith explains here why the bill will help:
Congress needs to step in to help the roughly 18 million more Fannie- or Freddie-backed borrowers who are current on their monthly payments and carry above-market interest rates, according to estimates from Moody’s Analytics. By refinancing to today’s low rates — typically well below 4 percent — many of these families can save an average of $2,600 per year in mortgage payments, according to the Congressional Budget Office. […]
Mark Zandi, chief economist at Moody’s Analytics, estimates that the proposed legislation would result in 2.9 million more refinancings, helping borrowers save a combined $7 billion annually in mortgage payments. Since many of these borrowers are middle-income families, most of those savings will likely be spent elsewhere in the economy, bolstering growth and creating jobs.
The administration has said that it will implement some changes to refinancing programs by executive order, if Congress doesn’t act.