Senator Jeff Merkley recently set forth a new mortgage refinance plan to help American borrowers underwater on their mortgages, which has now been endorsed by Treasury Secretary Timothy Geithner.
According to HousingWire, Geithner said he would look into launching the pilot programs that would help more than 8 million underwater borrowers.
"We like the way you designed it," Geithner told Merkley at a Senate Banking Committee hearing Thursday. "It would help reduce the remaining pressures that housing has on the economy." The bill doesn't leave the taxpayer to pay for it."
The new plan would have the government buy underwater mortgages, and allow borrowers a variety of options to make them more affordable. Qualified borrowers could potentially reduce their principal, extend the term of their loan or decrease their rates mortgage rates.
Despite the optimism from Geithner, Patrick Pulatie of LFI Analytics told HousingWire he is skeptical about the program.
"As Fed studies show, loan-to-value for underwater borrowers is not a factor in defaults, unless there are income pressures. At that time, LTV may play a part in default decisions," he told the news source. "People who have the money to make payments, continue to do so, even if underwater."
This entry was posted on Monday, July 30th, 2012 at 3:29 am and is filed under Mortgage News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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