Mass refinancing: The ‘biggest thing’ Obama can do without Congress

Mass refinancing: The ‘biggest thing’ Obama can do without Congress:

Hubbard is an advocate for using Fannie Mae and Freddie Mac to set off a nationwide wave of mortgage refinancing. In a paper co-authored with Columbia economist Christopher Mayer, Hubbard estimates that more than 75 percent of the homeowners with 30-year mortgages backed by Fannie or Freddie are paying interest rates higher than 5 percent. But for the past two years, interest rates have been closer to 4 percent. That means tens of millions of Americans are paying more than they need to every single month.

Some of these homeowners have good reason to resist refinancing. They plan to move soon, or they lied on their initial mortgage application, or they can’t afford the up-front costs. Some have been scared off of new financial products by the events of the past few years. But many simply don’t follow the month-to-month gyrations of interest rates. Others are deterred by conditions set down by Fannie and Freddie — although those have been substantially eased over the past few months, albeit with little fanfare.

Those homeowners represent one of the president’s few remaining opportunities to help a substantial number of Americans. That’s because a major push on refinancing is one of the few policies the Obama administration could accomplish without the help of Congress.

(Via Ezra Klein)