I have read stories where tornadoes have hurled pieces of wood so fast that they have penetrated concrete walls.  Too bad the wind coming out of Washington is focused on PORK and RHETORIC  and can not focus their energies on making mortgage lending more helpful.

There are thousands of homeowners that are unable to take advantage of lower mortgage rates.  Not because they are unemployed.  Not because they are not managing their credit.  Not because they do not have savings.  It is because the lenders are looking at the value of their current home and saying that they do not have enough equity for a lower rate refinance. 

Talk about short sighted.  We have borrowers that have seen their equity drop from 20% - 35% or more to under 20%.  They believe that this is a short term loss and plan to stay in their homes.  But because of the current market, they are faced with coming up with funds to buy down their mortgage, paying for privat mortgage insurance or keeping the higher interest rate.  Instead of increasing family cash flows, the lenders are trying to improve their collateral risk while taking Billions to cover their mistakes.

With all the money flowing out of Washington and all the talk about helping homeowners, I propose the following:

Let the government allocate some of the Billions to create a fund to protect lenders due to future losses resulting from collateral risk.

if a borrower meets CREDIT and INCOME requirements, then lenders should be able to allow a rate/term refinance.  This would improve the family's cash flow and make it more likely that the loan would not go into default and take away some of the paid of knowing that their equity has dropped.   If needed, the government can allocate some of the Billions to a default fund that would offset losses to this pool of loans.  The need for the fund would decrease over time as loan balances are paid down or as homes are sold.

What am I missing?  How many stories are there out there of homeowners that have faced this problem?

How many refinances have been taken by loan officers that died because of low appraisals?

Where is the CHANGE for the BETTER?