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Homeowners would see lower mortgage payments and rebuild equity more quickly.
That has fallen hugely, but it is because banks are trying to rebuild equity buffers winnowed by the financial crisis, not because of a lack of competition.
In a bankruptcy, such homeowners would likely have their loan principal reduced, lowering their payments and helping them to rebuild equity.
Under his plan, called Rebuilding American Homeownership, underwater homeowners who are current on their payments and meet other requirements would have the option to refinance to either lower their monthly payments or pay down their loans and rebuild equity.
Underwater homeowners who are current on their payments and meet other requirements would have the option to refinance to either lower their monthly payments or pay down their loans and rebuild equity.
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That's why principal reduction, which rebuilds equity by writing down what is actually owed, is such an effective foreclosure mitigation tool.
To encourage homeowners to rebuild their equity, Mr. Obama has also proposed that closing costs be covered for borrowers who apply their mortgage savings to their principal.
Nascent signs of life in the spring selling season are welcome, but it will take a far stronger economy, or far more aggressive antiforeclosure efforts, to substantially rebuild lost equity anytime soon.
Someone who can hold on to their job and make payments on an underwater home will eventually rebuild that equity.
You may think renting your home is a way to buy time and rebuild your equity.
They are in the process of rebuilding the equity and housing bubbles and have already created a massive bubble in the sovereign debt of Europe, America and Japan.
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Justyna Jupowicz-Kozak
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