While mortgage interest rates are at their lowest levels since 1945, millions of mortgages that carry interest rates of 6 percent to 9 percent or even higher are not being refinanced. The reasons for this involve Fannie Mae and Freddie Mac, the two secondary mortgage market giants now in government conservatorships, in a central role. The problem is perhaps best seen through the eyes of borrowers who are unable to refinance. Each unsuccessful borrower cited below is representative of a sizable group of unsuccessful borrowers. Adam was turned down for a refinance because he did not meet the new stiffer underwriting and pricing requirements set by the agencies in their standard programs. His credit score, which was acceptable when he got his loan before the crisis, is not high enough to meet the new requirements.It clearly was appropriate for the agencies to correct the excessively liberal rules that had prevailed during the go-go years, which contributed to the financial cri...
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