In a move that is sure to elicit criticism, the Obama administration announced yesterday that borrowers with mortgages worth up to 125 percent of their home’s value will be able to refinance under the administration’s program to aid foreclosure victims. The one hitch is that the homeowner cannot be behind on their mortgage payments.
The goal of this change is to help homeowners who have not been able to take advantage of the low interest rates that have been available in recent weeks due to the fact that the value of their property has dropped significantly. The program currently caps eligibility for the program to homeowners that have a loan-to-home value ratio of 105 percent. Many homeowners in the country are unfortunately well above that ratio.
The change will certainly draw the ire of people who believe that policies like this are the reason that we got into the housing mess in the first place. However, rising interest rates could be the real issue. The days of 4.8 percent interest rates are in the past, and refinancing has noticeably decreased in recent weeks. 30-year fixed rate mortgages are now back at 5.4 percent.
This article originally published at https://dc.urbanturf.com/articles/blog/obama_expands_foreclosure_program/1093.
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