Feds launch refinance plan to help homeowners

TUCSON, AZ (Tucson News Now) - More help is on the way for those looking to refinance their homes.

President Obama announced on Monday new measures to help borrowers refinance existing mortgages to new loans with lower interest rates and cheaper monthly payments.

"In these tough economic times if you can lower your mortgage payment $50, $100 and $200 that can have a big impact," said John Capp with Sunstreet Mortgage.

The program is designed to help those homeowners who wouldn't normally qualify, he said.

"Probably 50% of our borrowers can't refinance because they don't have equity in their house."

To be eligible, Capp said, Fannie Mae or Freddie Mac must have purchased your mortgage by May 31, 2009.

The plan may only help an estimated 1 million people across the country, but Capp explains a large number in Tucson could be helped because property values dropped off so drastically here.

"It's got to be in the tens of thousands, tens of thousands of homes would now become eligible."

"It's significant that it would put money back in peoples pockets, it's more significant that it would keep people in their homes," Capp said.

The only other criteria, he said, is you have to have made your mortgage payment on time for the last six months and you haven't been more than one month late in the last year.

"They don't care about credit, they don't care about income, they don't necessarily care about an appraisal.  So in this age of when the guidelines have gotten more and more conservative, this is now the mother of all no-doc loans."

And while it could help a lot of people, Capp says there could be a problem: It's a government program.

"They have to get the banks to say OK, we'll go along with this. We'll go ahead and purchase those loans, because if they don't get the banks to sign off, this is all for naught."

Copyright 2011 KOLD. All rights reserved.