Mortgage refinance activity could see a big jump if some legislators have their way.
A bill has been introduced that would allow borrowers who are current on their payments to refinance mortgage loans to a lower rate, and eliminate all up-front fees and appraisal fees.
This would apply only to mortgage loans held by Fannie Mae and Freddie Mac, which may cover as many as 17.5 million home loans guaranteed by the government.
However, a sweeping mortgage refinance program like that could violate agreements with bondholders and amount to taking money from from investors without adding any new money to the housing market,which would not help to stimulate the economy.
Also, mortgage administrators may not have the power to break contracts with banks, pension funds, mutual funds and other investors in mortgage-backed securities.
An alternative plan is aimed at reducing mortgage refinance rates and the loan term for those who are current on their payments but their home values are less than their loans,which could build equity faster and potentially reduce loan defaults.
A bill has been introduced that would allow borrowers who are current on their payments to refinance mortgage loans to a lower rate, and eliminate all up-front fees and appraisal fees.
This would apply only to mortgage loans held by Fannie Mae and Freddie Mac, which may cover as many as 17.5 million home loans guaranteed by the government.
However, a sweeping mortgage refinance program like that could violate agreements with bondholders and amount to taking money from from investors without adding any new money to the housing market,which would not help to stimulate the economy.
Also, mortgage administrators may not have the power to break contracts with banks, pension funds, mutual funds and other investors in mortgage-backed securities.
An alternative plan is aimed at reducing mortgage refinance rates and the loan term for those who are current on their payments but their home values are less than their loans,which could build equity faster and potentially reduce loan defaults.