Today’s Wall Street Journal runs a breaking news story that Federal regulators on Monday plan to unveil a major overhaul of an under-used mortgage-refinance program designed to help millions of Americans whose home values have tumbled. The article continues: “Officials at the Federal Housing Finance Agency, which regulates Fannie and Freddie, estimate that between 800,000 and one million more borrowers should be able to refinance. “It’s in our interest to have these borrowers refinance into lower rates and continue to pay,” said an FHFA official.” A look at the chart below shows that the Maryland and Virginia markets will likely be impacted with 500,000 to 1 million potential loans reductions, and DC, West Virginia and Delaware projected at less than 500,000.
While this may come as welcome news to help stabilize the housing market, there are numerous implications to be considered, states the article. Aside from the “rush” on the mortgage lenders, homeowner acceptance remains a barrier and, of course, the job market plays a role since the qualification and reduced appraisal standards will still apply.
And, as noted “the plan will streamline the refinance process by eliminating appraisals and extensive underwriting requirements for most borrowers, as long as homeowners are current on their mortgage payments.”
Note below the gap between actual and projected refis, and this must be what has spurred the concern of the Administration as the HARP program is not delivering projected results.
Keep in mind this is a proposal and the Obama Administration will likely face hurdles in gaining approvals, especially with an election year upon us. Stay tuned for more on this breaking development.