- Jan 2010
U.S. readies stronger lifeline for homeowners
(Reuters) - Homeowners who owe more than their houses are worth will get new help to refinance in a government plan to be unveiled as early as Monday to support the battered housing sector, sources familiar with the effort said.
The Obama administration has been working with the regulator for Fannie Mae and Freddie Mac to find ways to make it easier for borrowers to switch to cheaper loans even if they have little to no equity in their homes.
The regulator, the Federal Housing Finance Agency, intends to loosen the terms of the two-year-old Home Affordable Refinance Program, which helps borrowers who have been making mortgage payments on time but who have not been able to refinance as their home values have dropped.
Officials have been frustrated that attempts to bolster housing -- the epicenter of the deepest U.S. recession since the Great Depression -- have borne little fruit. Some top Federal Reserve officials want the central bank to consider buying more mortgage-backed securities as a way to help.
While housing prices have stabilized recently, they remain almost a third below the peak reached in 2006.
HARP has been criticized by both Democratic and Republican lawmakers as ineffective in reducing foreclosures, and the changes under consideration are unlikely to be a panacea.
After meeting with the head of FHFA earlier this month, one lawmaker said an expanded program could help as many as 600,000 to one million troubled borrowers avoid foreclosure.
But that is only a fraction of the estimated 11 million homeowners who are underwater, meaning they owe more than their homes are worth.
more: U.S. readies stronger lifeline for homeowners | Reuters
I'm sure the people they help will be very grateful, but it doesn't sound like it's expected to be all that effective in stabilizing the housing market.