Federal Refinancing Plan Not Worth Costs, Most Homeowners Decide

The Barack Obama administration passed a plan to give banks incentives to modify mortgages.

It's an attempt to reduce the number of foreclosures and to steady home prices.

It's massive government intervention into the free market, the very thing that economists such as Thomas Sowell say got us into this trouble in the first place.

Like most government operations, this one requires massive paperwork. This is slowing its movement through banks. This is discouraging homeowners.

The Washington Post reports:

A seven-month-old government program to help homeowners with little or no equity refinance their mortgages has so far reached fewer than 3 percent of those targeted, with many struggling borrowers deciding that the benefits of a new loan aren't worth the closing costs.

This lackluster performance reflects the difficulty of helping the growing segment of "underwater" homeowners — those who owe more than their home is worth.

The program is a key component of the Obama administration's efforts to stabilize the housing market and arrest the nation's growing foreclosure rate.