Report: White House considering broad refinancing plan

The Obama administration is considering a plan to jump-start the economy that would allow homeowners with government-backed mortgages to refinance them at today’s lower interest rates, about 4%. According to The New York Times, which reported the plan, this would stimulate the economy by cutting people’s mortgage bills right away, allowing them to spend the savings elsewhere. One estimate cited by the newspaper says this would save homeowners $85 billion a year. But the plan may face opposition from the regulator who oversees Fannie Mae and Freddie Mac. “This is the best stimulus out there because it doesn’t increase the deficit, it accomplishes monetary policy, and it reduces defaults in housing,” says Christopher J. Mayer, an economist at the Columbia Business School. “So I think this is low-hanging fruit.” Mayer proposed an early version of the plan, along with Glenn Hubbard, who was chairman of the Council of Economic Advisors under former President George W. Bush. The idea also appeals to the White House because adopting it would not require congressional approval. Read the full story here.