Under guise of helping homeowners, president Obama has finalized his plan to further aid banks. Please consider Obama's alleged Mortgage Relief Plan.
The White House on Tuesday announced it was cutting the mortgage fees charged by the Federal Housing Administration’s refinancing program in another effort to help the languishing housing market recover.
President Barack Obama will announce the move at an afternoon press conference, his first since November.
An estimated 2 million to 3 million FHA borrowers will be eligible to benefit from the revamped program, the White House said in a statement.
The measures to be announced by Obama this afternoon do not need Congressional approval.
Under the revised FHA streamlined refinancing program for loans originated prior to June 2009, borrowers refinancing existing FHA loans would pay an up-front mortgage insurance premium of 0.01%, down from 1.0%. The annual premiums will be cut in half to 0.55%.
The reductions could save the typical FHA borrower about a thousand dollars per year, the White House said.
Jaret Seiberg, senior policy analyst with Guggenheim, said the plan would be “broadly positive” for housing and the economy by reducing foreclosures and freeing up income for consumers.
Big banks like J.P. Morgan Chase JPM and Wells Fargo WFC would see fee income related to FHA mortgages spike with this program, Seiberg said in a research note.
Broadly Positive For Whom?
Contrary to the opinions of Seiberg, this plan will not be "broadly positive" for housing and the economy any more than numerous other misguided attempts purported to do the same thing, all of which failed at their stated intent.
Throwing more taxpayer money down the drain will of course be "broadly positive" for big banks that will see income rise.
Indeed, much of the rally in bank shares this year has been in regards to "broadly positive" measures by the administration and the Fed purposely designed to bailout banks in contrast to stated reasons.
Moreover, the plan is sure to be "broadly positive" for Obama's reelection chances, and "broadly negative" for taxpayers who will no doubt end up footing the bill, perhaps in more ways than one.
Mike "Mish" Shedlock