A new proposal by federal regulators will require homeowners who want to refinance a home provide a 10-20% down payment or have 25-30% in equity. This rule was developed to comply with the Dodd-Frank Bill to overhaul the mortgage industry.
Unfortunately, this requirement will prevent many homeowners from refinancing their homes that have ARMs, balloon payment or high interest rates. This requirement would affect 25 million homeowners who will have to pay higher costs to refinance. Due to the recession many homeowners have less than 25% equity in their homes or no equity at all.
Homeowners who do not meet the requirements will have to pay 0.8 – 1.85% more in the interest rate. This proposed requirement also penalizes homeowners who have good credit who will be forced into less than favorable refinancing options.
This new proposal ignores the benefit of homeowners refinancing which would reduce the number of foreclosures and mortgage default rate. This will also slow the growth of the economy and middle class by stalling the housing market and reducing additional revenue that could be generated for mortgage industry companies.
Write your congressman to submit your comments about this proposed legislation.
