PORTLAND -- Mortgage rates may be at record lows, but millions of upside down homeowners can't take advantage because lenders won't refinance. Oregon Senator Jeff Merkley has a plan he says will help those homeowners and the entire economy by offering government backed refinancing options.
"A lot of folks have said lets put our money in America and that has driven down interest rates so lets seize that silver lining and put it to work for the eight million American homeowners who are now under water," said Merkley outside the home of a struggling homeowner in Northeast Portland.
Upside down homeowners who have never missed payments would be eligible for either 4 percent 15-year mortgages or 5 percent 30-year mortgages.
"The beauty of this is that no government funds are required. A trust would sell bonds to the public, those funds would go into mortgages and the trust would pay back those bonds and provide a profit to the American taxpayer," Merkley said.
Our news partner the Oregonian questioned the fairness of the plan in a recent editorial that said, "Is it fair for one family that is not in financial trouble to receive a government loan when such help is not available to a financially pressed family without an underwater mortgage?"
Merkley hopes to prove his plan will work by testing it here in Oregon using attorney general settlement funds. The Senator says he likely won't push for federal legislation until after the presidential election.