Consumer Law

Mortgage Refinancing Not So Easy

By Brian Wolfman

When mortgage rates drop, people with higher rates refinance, right? Maybe not. You still need someone willing to lend. Yesterday's Washington Post reports here that despite mortgage rates near historic lows some people are finding it difficult to refinance. The article explains that

[m]any borrowers who tried to refinance have found they're stuck because the value of their homes has tumbled and their equity has melted away. Others have been shut out because lenders tightened their requirements, demanding stellar credit and low debt. (emphasis added)  An effort by the Obama administration to overcome some of these challenges has fallen flat, frustrating many homeowners -- especially with mortgage rates expected to rise by year's end, if not sooner.

Should this really come as a huge surprise?  It is often said that the mortgage meltdown was caused, at least in part, by lenders pushing huge debts that they knew the borrowers could not afford. One way to deal with that is to tighten borrowing requirements -- requirements that may be self-imposed by lenders or demanded by the government.

Full post as published by CL&P Blog on February 15, 2010 (boomark / email).