With little change in mortgage rates or application activity this week, a couple of other developments took center stage in mortgage-related news:
- President Obama describes his wish list for mortgage reform. The President's speech outlined a vision for mortgage reform that includes winding down Fannie Mae and Freddie Mac, a reduced role for the federal government in insuring mortgages, and the continued availability of 30-year mortgages. The difficulty will be in reducing the government's role in the mortgage market while making sure that products like 30-year mortgages remain widely available. The government's role has been instrumental in the wide availability of mortgages, especially with respect to products that are as inherently risky to lenders as a 30-year loan.
Proposals from the President and Congress to reform the mortgage system may still be years away from impacting ordinary Americans. The fact that new trouble spots are emerging even as mortgage defaults and foreclosures are generally declining is of more immediate concern. It shows that even as the housing market has rallied, some homeowners cannot meet the loan obligations they have taken on.
For homeowners who are struggling to make their payments, one of their first moves should be to consult a refinancing calculator and an amortization schedule. A refinancing calculator can point to whether they could save money either lowering their interest rates or lengthening out their remaining loan term, or both. An amortization schedule could provide insight as to whether there is a way to better match up payment obligations over the life of the loan with the borrower's anticipated cash flow.
"This article originally appeared on Calculators4Mortgages.com: Disturbing News In The Mortgage Sector."