Here’s a highly cited WSJ article analyzing the implications of the economy of the Obama refinance program.
The boost to the economy will be small. Just as the Obama job program is unlikely to boost the demand for workers in the private sector.
Obama’s big trillion dollar stimulus of 2009 did little good. It was supposed to keep unemployment under 8%. Now it is above 9%.
The “estimated gains and losses are small relative to the size of the housing market, the mortgage market and the economy” and, thus, the effects would be small as well, the trio says. A large-scale refi program would benefit millions of borrowers, to be sure, but “would not address many of the problems facing the U.S. housing market,” including borrowers who are already in default or whose mortgages are so big relative to the value of the homes that refinancing isn’t the answer.
A number of schemes to make refinancing easier have been proposed by economists outside the government, and several have been dissected — and rejected — by the Obama administration. But the administration is looking for ways to encourage Fannie Mae and Freddie Mac, which have been effectively nationalized, to lower some of the barriers it has put up to refinancing lastly.