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
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
NYCHA interim CEO Lisa Bova-Hiatt (NYC.gov, Getty)
“Folks got misinformed”: Why NYCHA tenants stopped paying rent
“Folks got misinformed”: Why NYCHA tenants stopped paying rent
cliffside, building, money
$16B in CMBS loans nearing cliff in NYC
$16B in CMBS loans nearing cliff in NYC
A photo illustration of Peter Fine and 1959 Jerome Avenue (Getty, Google Maps)
Peter Fine to build 333 units in the Bronx
Peter Fine to build 333 units in the Bronx
a stalled construction site in New York
Expired 421a deadline jeopardizes 33K housing units
Expired 421a deadline jeopardizes 33K housing units
From left: Aby Rosen, Scott Rechler, and Ben Beitel with 175 Third Street, 120 East 144th Street, and 75 Dekalb Avenue
These were the 10 biggest projects announced in 2022
These were the 10 biggest projects announced in 2022
(Photo Illustration by Steven Dilakian for The Real Deal with Getty)
Mortgage applications surge 25% in the new year as interest rates drop
Mortgage applications surge 25% in the new year as interest rates drop
New York Governor Kathy Hochul
Handicapping Hochul’s housing agenda
Handicapping Hochul’s housing agenda
arrow_forward_ios

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

Loading...