US to rescue borrowers whose loans are worth more than their homes
The US housing market regulator has agreed to extend a refinancing scheme for borrowers whose loans are worth more than their homes.
The move by the Federal Housing Finance Agency (FHFA) could help up to a million people who have met repayments but who are unable to renegotiate. However, it is expected to help fewer than 10% of people in that position.
It is estimated there are 11 million “underwater borrowers” in the US who pay on time but are locked into loans.
The latest move to help boost the flagging US housing market is aimed at unable to change the terms of their loan because the value of the property it is secured on is smaller than the amount they owe or want to borrow.
The FHFA said it was scrapping a cap that excluded borrowers with mortgages worth more than 125% of their property's value from the Home Affordable Refinance Program (Harp).
That program covers loans backed by the mortgage giants Fannie Mae and Freddie Mac, the two largest sources of mortgage financing in the US.
The FHFA said it wanted to focus on people who took out loans between 2004 and 2008, with interest rates of 5%. Currently a typical 30-year loan, the most common in the US, is charged at 4%.
The housing market is seen as one of the central problems for the US economy and previous attempts to boost it have barely succeeded.
Large areas of the country have seen wide-scale repossessions, leading to abandoned housing developments.
The Obama administration hopes that lowering mortgage payments could release cash for other spending to support the economy, analysts say.
Fannie Mae and Freddie Mac have had 141bn dollars in taxpayer support since 2008, when the credit crisis left them in deep difficulties.
Suggested Stories
-
May 21st 2012
Bargains forecasts in Uruguay as Argentine investors withdraw funds following new bank rules
-
May 25th 2012
Germany should exit the Euro and revalue its currency, suggests top economist
-
May 25th 2012
EU files suit against Argentina with WTO, but it’s a long process
-
May 25th 2012
Spain’s richest region closer to default without central government aid
1 comment Feed
Note: Comments do not reflect MercoPress’ opinions. They are the personal view of our users. We wish to keep this as open and unregulated as possible. However, rude or foul language, discriminative comments (based on ethnicity, religion, gender, nationality, sexual orientation or the sort), spamming or any other offensive or inappropriate behaviour will not be tolerated. Please report any inadequate posts to the editor. Comments must be in English. Thank you.
Oh, lucky people, that the cost you bear because of your greed can be borne by the government out of general taxation and the printing of money.
Oh, unlucky people in much of the rest of the world, whose governments do not have the resources to do likewise for their people put out of work, whose mortgages have been forclosed, and who have no prospects of a decent future.
Oh, you lucky people to be citizens, green-carders or illegal occupants of this great united states.
Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!