The Obama administration is creating a Fannie Mae and Freddie Mac refinancing program to give 4 million to 5 million homeowners a chance of obtaining lower interest rate loans even though the value of their homes has eroded and they are having difficulty refinancing under existing standards.
This new program is limited to homeowners that owe more than 80% of the value of the house and currently have conforming loans owned or guaranteed by the government-sponsored enterprises.
Fannie and Freddie can waive mortgage insurance requirements in refinancing these loans, unless the borrower has private mortgage insurance. In that case, the borrower will continue to pay insurance premiums on the new mortgage.
This program will provide "access to low-cost refinancing for responsible homeowners suffering from falling home prices," according to a summary of the president's foreclosure prevention plan.
President Barack Obama, Treasury secretary Timothy Geithner and Housing secretary Shaun Donovan unveiled a comprehensive plan to address the foreclosure crisis at an event in Mesa, Ariz.
