Refinancing, Regulations, and Deductions: Housing Policies to Expect from Obama

• November 9, 2012

by Shilpi Paul

Though neither presidential candidate spoke too much about housing policy during their campaign, Trulia’s Chief Economist Jed Kolko made a few assertions about what Americans should expect from another Obama presidency.

Here is what Kolko sees:

• Obama will continue to encourage refinancing. — Historically low interest rates are leading many homeowners to refinance their mortgages, and other Obama policies made it easier for homeowners to refinance to avoid foreclosure. Expect more of the same, says Kolko.

• The Consumer Financial Protection Bureau (CFPB) will lead to new mortgage regulations. — CFPB, created with help from newly elected Senator Elizabeth Warren, will likely force lenders to use new standards by which to judge a borrower’s ability to pay off their mortgage, in order to keep unqualified borrowers from taking out a large mortgage. Romney wanted to repeal the related Dodd-Frank Act to ensure that lenders keep lending; now, said Kolko, the Act and new mortgage regulations are a reality.

• Mortgage interest deductions are safe. — Mortgage interest tax deductions help many Americans with their tax bills. Though Romney wanted to cap all itemized tax deductions, Obama will cut the deduction only for the wealthy. This is particularly good news for our area, Kolko told UrbanTurf. “Maryland and Virgina are #1 and #3 in the table of mortgage interest deduction claimed per household,” said Kolko, “with DC also on the top ten list.”

• Shared appreciation loan modifications may have been defeated along with Romney. Romney was in favor of “shared appreciation” loan modifications, which is a way for borrowers to lower their unpaid principal balance in exchange for sharing the appreciation with whomever took the hit. “Shared-appreciation loan modifications are an approach to principal reductions that Democrats, Republicans, and even a financial regulator could all learn to love. It would be a shame if this approach to keeping more people in their homes goes down in defeat,” said Kolko.

For Kolko’s full analysis, click here.

This article originally published at http://dc.urbanturf.com/articles/blog/refinancing_regulations_and_deductions_housing_policy_to_expect_from_obama/6277