President Barack Obama is set to announce a new mortgage refinance program on Wednesday that aims to help borrowers take advantage of historically low interest rates. The program is said to expand on previous attempts at refinancing for troubled borrowers and will grant more homeowners eligibility.
Obama Refinance Program to Help Troubled Homeowners
Senior Obama administration officials announced his fresh bid to revive the housing market on Wednesday through his new mortgage refinance option.
The plan will help borrowers who are at least six months current on their mortgages refinance and have no more than one delinquency in the previous six months to move into lower-interest federally insured loans. It would also allow individuals who carry underwater mortgages and have credit scores as low as 580.
It will be extended to roughly one-third of all mortgages that aren’t backed by federal entities and have been bundled by private firms or are owned by banks. In these cases, the Federal Housing Administration will guarantee the new loans instead.
Mortgage Refinance Program Expected to Spur Debates
The new mortgage refinance plan, which was first announced in the State of the Union address last week, is expected to spur debates since much of the government disagrees about how aggressively it should intervene in the housing market.
Additionally, lawmakers fiercely disagree about how to fund the effort, which is estimated to bring with it a $5 billion to $10 billion price tag. The White House is proposing a tax on large banks, but Republicans have already said they oppose this option.
Obama is expected to unveil this along with other housing initiatives during his speech in Fairfax, Va.