How do you spell relief?

Source: Wall Street Journal

How many of the estimated 10 million-plus homeowners who owe a bank more than their home is worth would refinance into a lower interest rate if they could, and if the deal were sweetened for them? How many banks would take a haircut on the principal on those refinanced loans providing the government took some some of the hit and eased the blow? How many potential strategic defaulters are still out there, poised to mail in the keys at the slightest provocation, knowing that under current terms, it'll be a decade or more before they're whole again on what they've agreed to pay for their home? In answer to the first question, if there are 1 million borrowers who could and would refinance under a new program being proposed today by federal regulators and the Administration, then the economic impact could be significant. It could cause more people to spend money they're currently paying to service their mortgage debt for consumer goods and services. It could also begin to stabilize home values, the American economy's most viciously moving target. This morning's Wall Street Journal features a report by Nick Timiraos on the new proposed plan to ignite refinancing among a pool of borrowers previously shut out of the chance to lock in lower interest rates. Timiraos writes, "The overhaul will, among other things, let borrowers refinance regardless of how far their homes have fallen in value, eliminating previous limits. That could open up refinancing to legions of borrowers in Nevada, Arizona, Florida, California and elsewhere who are paying high interest rates and are deeply 'underwater,' owing more than their houses are worth. President Barack Obama is expected to tout the program in Las Vegas on Monday. The plan will streamline the refinance process by eliminating appraisals and extensive underwriting requirements for most borrowers, as long as homeowners are current on their mortgage payments, according to administration officials and an official at the Federal Housing Finance Agency. Fannie and Freddie have also agreed to waive some fees that made refinancing less attractive for some." The acronym-developers are busy this morning.
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