Earlier this year, the government rolled out a homeowner rescue plan for those that could not make their mortgage payments and risked the possibility of default on their home loan. Politically, this was a wonderful event and made everyone feel all warm and fuzzy inside. Many looking to utilize the program for a refinance home mortgage lost their giddy enthusiasm once the details were rolled out.
First, it was rolled out as a lender optional plan. If the lender did not wish to take a loss on the mortgage, they were not obliged to conform and refinance the borrower. Secondly, the borrower would have to share the profit proceeds from a future sale of the home with the refinancing lender. In some cases, all proceeds from the home sale would go directly to the lender. Not much incentive for a refinance home mortgage, when the borrower is already upside down on their current home loan.