Washington: US President Barack Obama announced on Tuesday a cut in fees on many government-backed mortgages that he said could help millions of homeowners refinance, part of an election-year push to boost the shaky US housing market.
Under the plan, a typical borrower with a loan backed by the Federal Housing Administration could save $1,000 a year by refinancing into a new FHA loan, the White House said. The fee reductions would be on top of any savings from a lower interest rate.
Two million to three million borrowers would be eligible, although the White House said participation would more likely number in the "hundreds of thousands."
The step is the latest in a series by the Obama administration to aid a depressed US housing market and homeowners threatened by a rising tide of foreclosures. About 11.1 million Americans now owe more than their homes are worth.
"I'm not one of those people who believe that we just sit by and wait for the housing market to hit bottom," Obama said at a news conference. "There are real things we can do right now that would make a substantial difference in the lives of innocent, responsible homeowners."
Obama, who faces re-election in November, introduced the cut in mortgage fees alongside efforts to compensate members of the military who may have been wrongfully foreclosed.
The lower fees being put in place would be available to borrowers seeking a new loan through FHA's streamlined refinancing programme, and even borrowers who owe more on their mortgage than their homes are worth would be eligible.
Under the streamlined programme, borrowers must be current on their payments and income verifications, and appraisals are waived.
The reduced fees announced Tuesday would be available to borrowers who are refinancing loans taken out before June 1, 2009.
Benefits
Of the 5.4 million 30-year fixed-rate mortgages that the FHA backs, 3.2 million would not be eligible because they were issued after the June 1, 2009, cut-off date, according to Mahesh Swaminathan, an analyst at Credit Suisse Group AG.
The reduced fees, though, should help enough homeowners that there will be a positive ripple effect throughout the US economy, according to Jaret Seiberg, senior policy analyst with Guggenheim Securities.
