U.S. Sen. Johnny Isakson (R-GA) has announced his support for executive actions recently proposed by the Obama Administration and Federal Housing Finance Agency, which would aid millions of borrowers with non-delinquent but “underwater” Fannie Mae or Freddie Mac-backed mortgages to refinance their mortgages at historically low interest rates.
The proposed Obama plan draws many elements from the “Helping Responsible Homeowners Act,” previously jointly proposed by Senator Isakson and Senator Barbara Boxer (D-California). According to an October 2011 press release, which was jointly announced with Senator Boxer “The reforms announced today by the Federal Housing Finance Agency (FHFA) are aimed at helping the millions of borrowers with non-delinquent Fannie Mae or Freddie Mac-backed mortgages. Changes include eliminating risk-based fees on loans for which Fannie and Freddie already bear the risk, and removing refinancing limits on underwater properties – two significant components of S. 170, the Helping Responsible Homeowners Act.”
Senator Isakson specifically commented “This is a positive step in the right direction for the preservation of home ownership for those Americans who have been making their payments and meeting their obligations. They deserve the benefit of today’s lower interest rates.”
In a joint letter to President Obama described in October 25, 2011 press release, Boxer and Isakson wrote, “We encourage your Administration to act swiftly to implement the refinancing plan, and to do so in a way that will make it simple for the millions of eligible homeowners to find out if they qualify and what they have to do to lower their payments.”
Mark Zandi, chief economist at Moody’s Analytics, estimated the new plan could help an additional 1.6 million homeowners refinance by the end of 2013. “By refinancing at today’s low rates, the average homeowner – with a $150,000 loan – could save $1,600 a year.” Interest rates remain near historically low levels, at 4.11 percent for a 30-year fixed mortgage.
Despite bi-partisian support in Washington citizens in Georgia are less enthusiastic. “Given how badly the Federal Government, Fannie Mae, and Freddie Mac have managed the mortgage markets, why try to tinker with more Federal loans at all ?” Says one Tea Party member. “Why not move toward getting the Feds out of the Mortgage lending business altogether, and back the Federal role down to minimal regulation of private mortgage markets, give the responsibility and risk back to the banks, and take the federal government out of the mortgage business?”
Senator Isakson’s office responded, “Johnny does agree that we need to reform government-sponsored enterprises such as Fannie Mae and Freddie Mac, he supports a gradual winding down of the federal government’s position and is currently researching the best method to begin this shift without adversely affecting our delicate economy.”
By Mark Murphy, TPP Citizen Journalist