Dateline Phoenix (UK.Reuters):
“Today, as a result of declining home values, millions of families are “underwater,” which means they owe more on their mortgages than their homes are worth. These families are unable to sell their homes, and unable to refinance them. So in the event of a job loss or another emergency, their options are limited.
“Right now, Fannie Mae and Freddie Mac — the institutions that guarantee home loans for millions of middle-class families — are generally not permitted to guarantee refinancing for mortgages valued at more than 80 percent of the home’s worth. So families who are underwater — or close to being underwater — cannot turn to these lending institutions for help.
“My plan changes that by removing this restriction on Fannie and Freddie so that they can refinance mortgages they already own or guarantee. This will allow millions of families stuck with loans at a higher rate to refinance. And the estimated cost to taxpayers would be roughly zero; while Fannie and Freddie would receive less money in payments, this would be balanced out by a reduction in defaults and foreclosures. [balance of speech here.]
Sphere: Related Content
Maybe my expectations are just lowered by the Bush years, but I am so pleased that Obama recognizes the importance of Fannie and Freddie. This country was built through strong government programs and spending. The conservative myth that all private spending is wise and productive and public spending foolish and wasteful is what has gotten us into the economic mess we find ourselves in today. If there’s a solution in all of this, it comes from strong government. Now is the time to think big!