It's no secret that the housing market still has problems. In fact, few challenges to the US economy outweigh the housing bust. Despite low interest rates, millions of homeowners are unable to refinance, and the high level of foreclosures casts a cloud of uncertainty over the housing market.
Now that numerous initiatives under Mr. Obama and former President George W. Bush have yielded only modest fruit, many economists say new approaches should be tried. A host of ideas has emerged – aimed at preventing foreclosures, lightening homeowner debt loads, or spurring greater demand for real estate.
Glenn Hubbard, a top economist for Mr. Bush, and his Columbia University colleague Christopher Mayer have put forth one approach designed to ramp up the pace of mortgage refinancing.
The plan would offer current low interest rates to millions of Americans with loans backed by Fannie Mae or Freddie Mac. A typical household might see a 15 percent cut in its monthly mortgage payment – savings that could provide a buffer against default and foreclosure, or at least free up money that the family could spend elsewhere in the economy.
