Obama prioritizes mortgage refinances even as previous initiatives face trouble

TRD New York /
May.May 09, 2012 10:00 AM

As the election approaches, President Barack Obama is increasing his push to help more Americans refinance their home loans, according to the Wall Street Journal, but recent data shows that his efforts to date have had lackluster results. Bloomberg News reported that more Federal Housing Administration-insured loans entered foreclosure in March, largely because of refinanced loans.

Half of the mortgages the agency modified in hopes of helping the borrower were in default again a year or more later. Just 84.2 percent of government-backed loans were paid on time during the fourth quarter of 2011, a full percentage point less than the previous three months.

Yet with such high demand for refinances, prospective refinance applicants face longer-than-ever delays in securing reduced payments, according to a separate report from the Journal. Though decreased interest rates have helped unlock $46 billion in first-year savings for people who refinances their mortgages in the last three years, new applicants are worried they’ll be shut out of the savings. On average, it takes banks 70 days to complete a mortgage refinance, up from 45 days last year.

With demand so high, some banks have actually lifted the interest rates they charge in order to reduce their workloads and boost profits.

Still, Obama is pushing to further reshape the mortgage refinance market. He hopes to enact changes that make it less risky for banks to refinance loans by limiting lenders’ need to buy back loans. He also plans to let homeowners without government-insured loans to refinance into mortgages backed by the FHA.  [WSJ], [Bloomberg] and [WSJ]

Related Articles

A rendering of 165 Broome Street (Credit: Handel Architects)

Nonprofit plans affordable housing development near Essex Crossing

All Falls Down: Kanye West’s “Star Wars”-themed affordable housing plan hits snag

All Falls Down: Kanye West’s “Star Wars”-themed affordable housing plan hits snag

The bank is accused of systematically trying to foreclose on mortgages after the state’s six-year statute of limitations had passed. (Credit: iStock)

BNY Mellon faces suit over foreclosures from the housing crash

 NYCHA CEO Gregory Russ and NYCHA houses (Credit: Minneapolis Public Housing Authority and Getty Images)

NYCHA head: Agency now needs $40B in repairs

Seattle, Washington (Credit: iStock)

Good luck buying an affordable home in these US cities

Carl Heastie highlighted homelessness and housing affordability in remarks to open the 2020 session (Credit: Facebook, Getty Images)

Heastie drills down on homelessness, affordable housing

They’re just like us! “Billionaire” manse buyer takes out $58M mortgage

They’re just like us! “Billionaire” manse buyer takes out $58M mortgage

147-07 94th Avenue in Jamaica and Pheonix Realty Group president Keith Rosenthal (Credit: Google Maps)

Phoenix Realty, Artimus snag $181M loan for Jamaica resi project