Obama Cites Government Foreclosures Campaign

In a roundtable session in Washington, D.C., President Obama cited the rise in home refinancing applications as one of the signs of the effectiveness of government foreclosures programs under his administration.

As reported by the Mortgage Bankers Association, home refinancing applications increased by 88 percent in March, compared to February levels. Fannie Mae also reported its home refinancing applications rose in March to $77 billion, which is double the volume in February.

Another sign of progress pointed out by the president is the decline of mortgage rates to very affordable levels. According to a survey conducted by Freddie Mac, mortgage rates fell to 4.87 percent this week for fixed-rate 30-year loans.

The president reiterated at the roundtable the real help that troubled but responsible homeowners can obtain from the government foreclosures program. He defined responsible people as folks who are not expecting handouts and who have been paying their monthly amortizations faithfully.

Among the participants in the roundtable are couple Luz and Pedro Cruz who were able to reduce their monthly payment by $700 and nurse Gail Johnson who cut her monthly payment by $400. They represented groups of homeowners in the nation’s capital who have been helped by the government foreclosures program under the Obama administration.

However, despite the effectiveness of the government foreclosures program for some homeowners, the program has yet to show significant impact on other groups of troubled borrowers, especially those who took out jumbo mortgages and those whose loans have shot up many times over the market value of their homes.

Under the current government foreclosures program, only borrowers whose loans are not higher by over 5 percent than the market value of their homes are qualified for the program. Also, only mortgage loans guaranteed or owned by Fannie Mae or Freddie Mac can be refinanced.

Wells Fargo and Bank of America, two of the nation’s largest lenders, have started accepting refinancing applications, but have decided to defer accepting applications from borrowers with mortgage loan insurance. Citigroup will start accepting applications for Fannie Mae-guaranteed loans on April 11 and has deferred accepting applications for loans backed by Freddie Mac. Sun Trust will also start accepting applications for Fannie Mae-backed loans on April 11 and has also deferred applications for loans backed by Freddie Mac to next month.

It can be said that the banks’ decision to defer accepting other types of loans under the government foreclosures program is a strategy to prevent chaos in their processing and to avoid the overloading of their computer systems. What is important is now they are willing to refinance loans and help thousands of American families save their houses from foreclosures.

Related Posts:

• Fannie, Freddie: Roles in Containing Repossessed Houses
• Demand for New Mortgage and Refinancing to Prevent Foreclosure Pushed By Low Rates
• Mortgage Insurers Help Foreclosed House Prevention Program
• Call for Obama to Speed up Sales of Forclosure Houses
• Mortgage Defaults Up, Repossessed Houses to Rise