According to the Financial Times: “: ….There has been speculation among investors that the government might decide to offer homeowners a way to refinance mortgages and replace them with cheaper loans….
“A government programme aimed at making it easier to replace mortgages with cheaper ones could reduce monthly home loan bills and boost consumer spending, an important driver of US economic activity.
The US Treasury is planning a conference this month to discuss the mortgage market, including reform of state-backed mortgage financiers Fannie Mae and Freddie Mac, which are now financing nearly all new mortgages…”
The real estate market today is being artificially propped up by failure of mortgage holders to foreclose on delinquent loans and to price repossessed houses at a true market value.
Home mortgages in large part were ‘sliced and diced’ and sold as part of securities, so there is no way for holders and borrowers to negotiate down the unpaid balance and interest rates. It would require a change in the law to allow the mortgage servicing companies to do so.
There is an understanding (benign conspiracy?) among the regulators and financial institutions not to recognize the true market value of the collateral (homes) on the institutions’ financial statements, because their earnings would plunge and in many case lenders would be judged insolvent.
Thus homes remain vacant and unsold or occupied but delinquent on mortgage payments.
