President Obama unveiled a new plan to cut fees associated with refinancing any government-backed mortgage. In doing so, he highlighted that the discounts associated with the new plan would save the typical American family whose mortgage refinance was obtained before June 1, 2009, about $1,000 per year. The change could affect somewhere between 2 million and 3 million Americans who received refinances through the Federal Housing Authority.
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“While the government cannot fix the housing market on its own, the president believes that responsible homeowners should not have to sit and wait for the market to hit bottom to get relief when there are measures at hand that can make a meaningful difference,” the White House said in announcing the plan, according to a report from the Christian Science Monitor.
The change comes as a response to fee increases by the FHA over the last few years that were intended to offset losses related to defaulted mortgages, the report said. It is intended to make the refinancing process easier for lenders and borrowers alike. Consumers who refinance will now have to pay an upfront mortgage premium of 0.1 per cent of their loan‘s total value, the lowest allowable rate, as well as an annual fee equal to 0.55 per cent. In addition, they will face lower ongoing fees on their mortgages backed by the FHA as long as they make a 3.5 per cent down payment on the purchase of a home.
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This change in FHA policy is just the latest attempt by the Obama administration to make it easier for troubled homeowners to cut the cost of their monthly mortgage payments, though many of the other attempts have drawn some fire for the difficulty that many homeowners across the country had in qualifying for them. Often, even the most financially troubled families, many whose home values had slipped below the amount they still owed on their mortgages, had trouble meeting the stringent requirements mandated by the federal government, and these programs typically ended up helping far fewer homeowners than they originally intended.
This story orginially appeared on Credit.com