The Obama administration is looking at creating a major refinancing program to help the housing market and give the economy a jolt, according to industry officials.
Mortgage executives say the White House is finally realizing they cannot get the economy rolling again until they provide some payment relief for the estimated 11 million under water borrowers. "You are not going to have the kind of robust economic recovery that you need with so many homeowners struggling under this debt," said Glen Corso, managing director of the Community Mortgage Banking Project.
Mortgage rates are at record lows. Yet these borrowers are blocked from refinancing and lowering their monthly payments because of negative equity.
"My best guess is the administration will offer incentives to lenders to allow borrowers who are current, but under water, refinance," one source said.
This source also added the refinancing program will focus on Fannie Mae and Freddie Mac guaranteed loans as well as mortgages in private-label securities. The GSEs already have a special refinancing program for borrowers with loan-to-value ratios above 105% -- but the effort has not reached many underwater borrowers.
President Obama is expected to discuss housing in an economic speech slated for September.