We’ve been hearing a lot about the lack of consumer confidence in the economy. The negative drumbeat of grim economic news has been steady. And consumers are the ones who have been taking it in.
But there’s some positive news on the legislative front that I am sure could get home owners – and all consumers – smiling again.
Legislation introduced by former REALTOR ® and good friend, Senator Johnny Isakson, and Senator Barbara Boxer would boost economic growth and keep more Americans in their homes by helping up to 2 million non-delinquent homeowners refinance their mortgages at today’s historically low interest rates.
Those that would benefit from the bill are home owners who are current on their payments, but are “underwater” on their homes because the value of their home is now less than the amount they owe on the home.
The legislation would save American families thousands of dollars and result in up to 54,000 fewer defaults. Few defaults in turn are good for both consumers and lending organizations.
By far though, the greatest benefit would be the infusion of confidence the resulting stabilized market conditions would bring to home owners and home buyers. Why? Because confident home owners and home buyers feel secure and therefore take actions that reflect that — they will spend more, will be able to start small businesses, and generally take actions that reinforce that confidence…and send a positive ripple effect throughout the entire economy.
Interest rates for 30-year home mortgages are currently at 4.12 percent, the lowest rate in 60 years. Yet of the 27.5 million mortgages guaranteed by Fannie Mae and Freddie Mac, more than 8 million still carry an interest rate at or above 6 percent.
The bill will also:
• Eliminate risk-based fees on loans for which Fannie and Freddie already bear the risk;
• Remove refinancing limits on underwater properties;
•Make it easier for borrowers with second mortgages to participate in refinancing programs;
• Require that borrowers are able to receive a fair interest rate, comparable to that received by any other borrower in good standing who has not suffered a drop in home value and has stayed current with their mortgage payments.
So, even though the days are getting shorter as fall approaches, positive proposals like this one have the potential to make them much brighter.