Obama prioritizes mortgage refinances even as previous initiatives face trouble

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

arrow_forward_ios
A rendering of 165 Broome Street (Credit: Handel Architects)
Nonprofit plans affordable housing development near Essex Crossing
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
All Falls Down: Kanye West’s “Star Wars”-themed affordable housing plan hits snag
Mayor Bill de Blasio (Getty, iStock)
NYC talked about converting hotels into affordable housing. Nothing’s happened yet
NYC talked about converting hotels into affordable housing. Nothing’s happened yet
President Joe Biden (Getty, iStock)
Biden’s broadband bucks could wire all of NY’s affordable housing
Biden’s broadband bucks could wire all of NY’s affordable housing
Enterprise President and CEO Priscilla Almodovar (Getty)
Enterprise closes low-income housing funds after raising $365M
Enterprise closes low-income housing funds after raising $365M
George Filopoulos, Lloyd Goldman and Gurney’s Montauk hotel  (Gurney's, Getty)
Metrovest, Lloyd Goldman secure $218M refi on Montauk resort
Metrovest, Lloyd Goldman secure $218M refi on Montauk resort
(iStock/Illustration by Kevin Rebong for The Real Deal)
Watchdog org: Put home-sale commissions in buyers’ hands
Watchdog org: Put home-sale commissions in buyers’ hands
(iStock)
Rents in New York and South Florida metros surged more than 30%, led nationwide rise
Rents in New York and South Florida metros surged more than 30%, led nationwide rise
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...