Obama Makes Renewed Push for Lower Rates on Refinancing
The Wall Street Journal recently reported that the Treasury might push a plan to allow Fannie Mae and Freddie Mac to purchase loans from private investors who face an imminent risk of default and allow them to refinance. The agencies would be allowed to charge a higher rate to compensate for the risk of the loan, but some fear that it would increase the risks to taxpayers.
Another proposal would allow borrowers to qualify for a reduced rate under the Home Affordable Modification Program, which wouldn't require legislation and therefore has a higher chance of being implemented.
"If the administration can act without congressional approval, such as the HARP expansion in October, we could see some changes on the mortgage front. But any large program expansions which require congressional approval are, in our view, not likely to go far," KBW's Gardner said in a note.
-- Written by Shanthi Bharatwaj in New York.