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'Underwater' refinance program gaining steam

August 1, 2012 @ 8:20 am

A proposed refinance plan could serve as a "huge anchor" for underwater homeowners and the economy, according to Northwest legislator about a proposal that is gaining widespread support.

"Millions of Americans are trapped in high-interest mortgages," Sen. Jeff Merkley, D-Ore., said in a statement. "A bold solution to help these families refinance is the fastest way to get our economy back on track."

Merkley has proposed a plan that would allow homeowners who are current on their mortgage payments to refinance into a lower interest rate, regardless if their mortgages are guaranteed by the federal government. The plan could help an estimated eight million underwater homeowners.

Borrowers would have the opportunity to refinance into three options: A 15-year mortgage with a 4 percent interest rate; a 30-year mortgage with a 5-percent rate; or a two-part mortgage with a first mortgage up to 95 percent of the home's value and a second mortgage for the balance (the second mortgage would not accumulate any interest or require payments for five years).

The plan has gained the support of Treasury Secretary Timothy Geithner, who reportedly said at a recent Senate Banking Committee meeting that he would like to launch pilot programs of the proposal. Merkley says the program can launch pilots without Congressional approval.

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Comments (2)


  • Add A Comment

  • 509 wrote...
    No chance....with Obama unless the banks and wall street get theirs!!!
    August 3, 2012 7:27 pm
    Trillions for Wall Street....Billions for Detroit.....the shaft for you and me.
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  • SickofSeattleite wrote...
    a 3% reduction in interest
    August 5, 2012 6:52 am
    isn't a great deal when I am underwater $140,000. A reduction in principle would be the only logical solution. Since i don't qualify for a bailout Fannie will keep my $100,000 I already paid in interest and my house... This is why I am voting for the candidate that plans on REDUCING GOVT PROGRAMS!!! Less Govt programs means less Govt screwing you. Besides all the money these people are saving in their cut in interest they will be FORCED to pay back to the GOVT for their Obamacare.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • { "Thumbs Up":"1","Thumbs Down":"-1" }