The Helping Responsible Homeowners Act could allow for people to refinance Fannie Mae and Fredie Mac loans regardless of whether they have positive or negative equity. If you are current on payments and your property is worth less than it was when you bought it shows that you are meeting the obligation that you signed up for-the definition of responsible. This is a Congress sponsored bill by Barbra Boxer (D) and Johnny Isakson (R). The Obama administration could also act on its own in a way that would not require Congressional approval. That doesn’t mean that it is happening.
Typically banks haven’t wanted to talk to anyone that was current. You’re current and we’re getting paid so why would we talk to you? This attitude has prevailed for years and has probably led to more short sales and foreclosures than if the banks had acted with foresight they’d probably own a lot.
This program would allow owners to lower their payments and therefore have (in theory) more money to pump into the economy all while reducing short sales and foreclosures. Fees would be lower than typical refinances and that should also free up money for consumers to pump into the economy.
There has to be some question of what credit scores should have to be in order to qualify? Does a low credit score get overlooked in this situation? “I’m current on my current debt obligations but have been late or done something to hurt my credit in the past.” Do you look at the overall debt obligation of just the mortgage in question?