At long last, Fannie Mae and Freddie Mac, the government-run mortgage companies, have issued new rules to allow millions of underwater borrowers, who are current on their payments, to refinance their high-rate mortgages into lower-rate loans. President Obama, who pushed for the changes, rightly emphasized the benefits in a speech on Monday in Las Vegas, a city ravaged by foreclosures. Refinancings will lower monthly payments, reduce the likelihood of default and boost consumer spending. What the president did not mention is that previous efforts to provide mortgage debt relief — by his administration and his predecessor’s — have all come up short. The new plan will require constant monitoring by the administration and midcourse corrections if, say, the rules for homeowners turn out to be overly restrictive or the banks lard up the new loans with excessive fees. [ABSTRACT FROM AUTHOR]
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