There are incentives for consumers to buy homes. There are programs for those in trouble to modify their loan terms. What about tossing a bone to those borrowers who have never missed a payment but also could use a break?
For example, I was recently contacted by a couple who are three years into an interest-only, adjustable-rate mortgage (ARM) that has its interest rate fixed for the first 10 years. The loan carries a prepayment penalty if the couple were to refinance the loan within the first five years of its term. The prepayment addendum, known in the loan industry as a "soft" prepay because no penalty is assessed if the couple sells the home, stipulates that a refinance could cost an amount equal to six months of interest payments.