A new home lending “revamp” has been announced by the Obama administration, but it already looks like it’s going to be a disaster. How would it work? Just ask an upper middle class family about all the cool things they could do with the money they’d save on a refinanced mortgage!
The revamp is aimed at homeowners like Christine and Hector Penunuri of Gilbert, Ariz., who have never missed a mortgage payment and who both have jobs and good credit. Yet their application to refinance their five-bedroom home, which has fallen in value, was denied earlier this year because their tax returns showed a $1,000 loss in start-up costs from Mr. Penunuri’s business, which isn’t even his day job.
It’s “absurd,” says their mortgage broker, Steve Walsh of Scottsdale, because the loan is already guaranteed by government-backed mortgage company Freddie Mac.
The Penunuris could save $350 a month by refinancing to a 4% rate from their current 5.75%. They would use that money to put their two sons into junior sports, take a family vacation and pay off other debts, says Ms. Penunuri, 41 years old. “It’s a win-win situation.”
Junior sports. A family vacation. And maybe pay off other debts.
It’s a win-win situation if you’re not one of the taxpayers struggling to make ends meet and underwriting someone else’s vacation.