Federal refinance program could address underwater mortgages - FOX5 Vegas - KVVU

Federal refinance program could address severely underwater mortgages

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LAS VEGAS (AP) -

A federal mortgage-refinancing program, backed by the Obama administration, could provide relief for those who are severely underwater on their mortgages.

The proposal requires homeowners to be current on their mortgage payments and hold a loan to value ratio on their home of at least 125 percent or higher. The plan would apply to all loans, not just those backed by Fannie Mae or Freddie Mac.

This has potential to help Las Vegans.

"They've got a carrot on the end of a stick and they're saying, 'follow us,'" said Kevin Savage of Evergreen Home Loans. "I'm saying, 'fine.' But I'm not gonna go off of a cliff following that carrot."

The plan was first reported by The Wall Street Journal.

According to Zillow.com, 63 percent of homeowners in Las Vegas were underwater on their mortgages in the third quarter of 2012, the highest rate in the nation.

The second quarter rate was 68 percent, while the first quarter was 71 percent.

The Greater Las Vegas Association of Realtors says the rates are dropping thanks to record sales in 2012 and rising home values, but GLVAR President Kolleen Kelley is reluctant to believe this new program would help Las Vegans based on the failure of other federal programs like Home Affordable Refinance Program, or HARP.

"It doesn't funnel down. It doesn't help most people, especially in Las Vegas," Kelley said.

The new mortgages would all be backed by Fannie Mae and Freddie Mac. Because of that, the program would require Congressional approval.

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