President Obama delivered his state of the union address this week. During his speech, he announced his intention to send a plan to Congress that will allow all homeowners who are current on their mortgages to refinance. The Wall Street Journal today published “Six Questions on Obama’s Mortgage Refinance Proposal” to further explain his plans.
There’s been a plan in place for years that allows homeowners with Freddie and Fannie backed mortgages to refinance. The difference with Obama’s new plan is that it will extend to other homeowners as well. It hasn’t been made clear what loans will be eligible, but it is known that Congress will have to pass legislation to put this plan into place. Given that, some experts aren’t optimistic that this plan will come to fruition.
It is likely that the plan will use the Federal Housing Administration to allow any homeowner to refinance even if they’re underwater on their home or their income has fallen since their last time refinancing.
This plan is not an automatic refinancing, as many experts have called for. Homeowners who want to refinance through this plan will have to pay upfront fees and fill out all of the necessary paperwork before the refinancing can go through.
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