Re-financing to lower mortgage requires an re-appraisal of the home. If you have a $200k mortgage on a house that will only appraise at $150k (or lower, as is the case in some areas of FL, CA, NV, AZ….) then you can’t refinance unless you bring the missing $$ to the table, or the bank forgoes it– which would be a form of cramdown. Either way it’s a haircut for the lender.
Did the Republican plan allow for refinancing without re-appraisal? If so, then existing mortgages could be rewritten on the principal balance at a lower rate– keeping more people in their houses with more money in their pockets. However, they’re still paying down a price that exceeds what the property is worth- more than what they (or the bank) would get selling it. Unless housing prices recover, as best all you’re doing is delaying the day of reckoning.
