President Obama is set today to propose a new mortgage refinancing plans for borrowers who are current on their mortgages. The president’s plan would allow mortgage holders to get a lower-interest federally-insured loan even if their current mortgage is underwater or if they are unable to get a loan from a private lender.
The program could cost up to $10 billion, which Obama proposes to pay by imposing a tax on banks. Congressional Republicans oppose any such tax, so the plan may be dead before it is even officially announced.
Another objection to the plan is that current mortgage bond holders would be paid off early, thus lowering their returns. That argument may not be made to loudly because there are many more mortgage holders than bond holders — and 2012 is an election year.
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