Despite some signs of a
wakening in the long-dormant housing market, the Obama administration has failed abysmally to help millions of homeowners who are under water, owing more than their houses are worth. This includes more than one-fifth of all homeowners with mortgages, or almost 11 million households.
Being under water has many downsides. One of the worst is that it prevents mobility, an essential ingredient in economic growth. People who need to move to find new jobs are stuck if they can't sell or rent their houses.
The Obama administration has plans to help homeowners whose mortgages are backed by the government, but there are many restrictions and caveats. Housing remains one of the most troublesome aspects of the gloomy fiscal outlook.
But we hear that the White House is considering a plan that would give Fannie Mae and Freddie Mac, the taxpayer-supported mortgage lenders, the ability to help millions of homeowners who have mortgages elsewhere refinance their under-water loans as long as they are up to date on their payments.
Unfortunately, such a move would require congressional action, and we all know what an unsure prospect that is. If Fannie Mae and Freddie Mac are permitted to guarantee refinanced loans, they would charge higher rates. The private mortgage industry has no problem with that, but it would balk at being forced to take back loans that default, which would increase the risk to Freddie Mac and Fannie Mae.
We think the refinance plan is worth serious attention and hope that next year's Congress will be more serious about spurring economic growth and helping desperate homeowners. The economy is wobbling, and any action that will help stabilize it and bring back confidence is important.