This article by Zachary A. Goldfarb cover the recent announcement that the FHFA (Federal Housing Finance Agency) will allow "underwater" homeowners to refinance their homes at very low nominal rates. The term "underwater" refers to homeowners who owe more on their homes that the actual value of the property. Although the program is expected to aid more that a million homeowners, the program was tried in 2009 and fell far short of it's expected effect. However, the FHFA removed the minimum cap on how much needed to be owed to participate in the program.
The agency hopes that the program could lower mortgage payments and free up some more money to be used in the economy (consumption, savings).Government Announces New Program to help "Underwater" Homeowners
This policy could be another failure for the Obama administration. The administration seems to be touting higher benefits than borrowers might actually realize. However, since congress recently rejected the Jobs act, Obama must be looking for any and every potential policy to help the economy. But like they said in the article, more direct action must be taken.
ReplyDeleteThe newly revised Home Affordable Refinance Program in theory should increase disposable income for participants. Hopefully lowering the standards for refinancing eligibility will reach the millions of people that were previously unable to take advantage of the program. If the government introduces new policies then it is only right that the people take advantage of the opportunity.
ReplyDeleteTo me the new program should be good to help people who were in trouble but at the same time Im afraid that with the no minimum cap they won't have enough budget to help everyone. Im curious to see the outcome of it. If this work consumption would surely increase.
ReplyDelete