September 6th, 2010 (Modified on September 9th, 2010)

HSH’s underwater refinance plan



First Washington gave taxpayer dollars to banks, then Wall Street. Since then, Washington has pumped billions of dollars into Fannie Mae and Freddie Mac, automakers and delinquent homeowners of all sorts. Billions more have been spent on stimulus. Our government has helped those who have been at the edge of bankruptcy, insolvency and foreclosure.

But where is the help for a homeowner who has done all the right things? Washington hasn’t directed any financial assistance at the homeowner who is current on all their payments, who wants to remain in their home over the long term yet can’t refinance because the value of their home has fallen significantly. Low mortgage rates are great, but if you can’t access them, they’re useless.

In the present economic climate, it’s getting harder for millions of people to want to remain responsible homeowners. Frankly, as things stand now, there’s little financial incentive for them to continue to behave responsibly, and plenty of potential benefit should they decide to behave badly.

We spent a fair bit of time thinking about what is perhaps the only group who hasn’t received any help whatsoever: homeowners who owe more on their homes then they are worth. These homeowners have found no help from anyone, but we think we’ve got a concept that is worth considering. READ ON…

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2 Responses to “HSH’s underwater refinance plan”

  1. Tim Manni Says: September 7th, 2010 at 12:25 pm

    Bruce from California had this to say:

    “I like your idea concerning Value Gap refinancing. Perhaps I missed it in your story but I feel that especially for individuals that are just slightly above the FHA loan limits with Jumbo Loans this program would possibly allow them to qualify for a conventional loan with the low interest rates they will unfortunately miss out on.

    This would lower payments on the monthly payment possibly allowing a portion of that savings being earmarked to pay back the Federal Loan on a monthly basis. This would probably make the other tax payers feel better about “the fix”.

    There is a large gap when it come to Jumbo Mortgages out there. Is this idea that you have come up with being looked at by Barney Franks or anyone in a power play position in the Federal Government?

    It sure seems like a great idea to me. Please reply to my email address.
    Thank you for the article, and the great idea!”

  2. Tim Manni Says: September 7th, 2010 at 12:27 pm

    JoAnne from Detroit said:

    The Value Gap Coverage Program sounds great and would assist a number of people who
    need assistance with their mortgage situations. However, there are those who purchased their homes prior to 2003 and refinanced for various reasons who would not b eligible for this program. What about those “good guys”. Once again, there is no help for them. They, too, are currently “underwater” and have no way out except to walk away from their property but continue to refuse to do so.

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About the HSH Blog's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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