Madison, WI – Data released recently by WISPIRG, the Metropolitan Milwaukee Fair Housing Council, the National Community Reinvestment Coalition (NCRC) The Wisconsin Partnership for Housing Development and the Center for Responsible Lending finds that making it easier for homeowners to refinance their mortgages could give consumers more options, save money, and stabilize Wisconsin’s housing market.
In Wisconsin alone, 171,875 families would qualify, saving them $504 million.*
“Right now, mortgage rates are below 4%, but nearly half of homeowners are stuck paying 5% or higher because they can’t refinance,” said Bruce Speight, WISPIRG Director.
“That may benefit the Wall Street banks who hold mortgagebacked securities, but it makes no sense for homeowners to be stuck paying above-market rates at a time when housing debt is a drag on the economy.”
Congress is currently considering reforms that, for homeowners who are current on their mortgages, would lift unnecessary barriers to refinancing and allowing consumers to shop around when refinancing their loan.
According to the data released today, adopting these reforms would help Wisconsin families, allowing them each to save $2,935 on average.
Nationwide, over 12 million homeowners would qualify, for total savings of nearly $40 billion to the country’s economy. Bethany Sanchez, who directs the Fair Lending Program at the Metropolitan Milwaukee Fair Housing Council and chairs the NCRC board of directors, noted “in Wisconsin as well as across the country, homeowners tell us that while their mortgage payments are current, because they are underwater, their bank won’t let them refinance, and they are paying more than they should.” Sanchez continued, “
Letting them refinance would help homeowners get out from underwater, put more money in their pockets, bolster the economy, and ultimately reduce the inventory of potential foreclosures.”
“Congress has an opportunity to bring struggling homeowners much-needed relief and stem the tide of foreclosures,” concluded Speight. “Our representatives should come together on these common-sense solutions.”
*Source: Boyce, Hubbard, Mayer, Witkin (Columbia Business School), “Now is the Time to Consider Widespread Refinancing” at http://www4.gsb.columbia.edu/realestate/research/housingcrisis.
Estimates apply to Fannie Mae- or Freddie Mac-backed mortgages.