The Obama refinance program — the Home Affordable Refinance Program — has gotten off to a slow start. Not only have banks had a hard time implementing the program, rates have deteriorated significantly since mid May so refinancing is no longer as enticing for consumers. Additionally, Freddie Mac was very slow to allow anyone but the existing lender to participate in the program so that created problems for some borrowers. On top of that, while the program officially allowed for refinances of up to 105% of the value of the home, most lenders were only willing to fund up to 95% of the value of the home. (This on top of the restrictions for people with second mortgages and the high credit score requirements.)
Well news is coming out this weekend that the Obama administration is not ready to throw in the towel on the program. Here are some quotes from a recent Bloomberg article on the topic:
We’re actively considering how to structure a program that makes sense over 105 percent, Federal Housing Finance Agency Director James Lockhart said yesterday. He said a ratio of 125 percent is a number that’s on the table, though not necessarily the number we’re going to end up with.
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While this will help some borrowers with higher interest rate loans, you really need to get mortgage rates down below 5 percent to have a huge impact on refinancing, Scott Buchta, a strategist at Guggenheim Capital Markets LLC in Chicago, said.