Despite signs of awakening in the long-dormant housing market, the Obama administration has failed abysmally to help millions of homeowners who owe more than their houses are worth. This includes almost 11 million households.
Being under water has many downsides. One of the worst is that it prevents mobility, an essential ingredient in economic growth.
The administration has plans to help homeowners whose mortgages are backed by the government, but there are many restrictions and caveats. Housing remains one of the most troublesome aspects of the gloomy fiscal outlook.
But we hear that the White House is considering a plan that would give Fannie Mae and Freddie Mac, the taxpayer-supported mortgage lenders, the ability to help millions of homeowners who have mortgages elsewhere refinance their under-water loans as long as they are up to date on their payments.
Unfortunately, such a move would require congressional action, and we all know what an unsure prospect that is.
If Fannie Mae and Freddie Mac are permitted to guarantee refinanced loans, they would charge higher rates. The private mortgage industry has no problem with that, but it would balk at being forced to take back loans that default.
We think the refinance plan is worth serious attention and hope that next year’s Congress will be more serious about spurring economic growth and helping desperate homeowners. Any action that will help stabilize the economy and bring back confidence is important.