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Obama Proposes Massive Mortgage-Refinance Plan

Posted on 1/25/2012

President Obama during his third State of the Union Address last night proposed legislation that would allow all homeowners who are current on their mortgage loans to refinance at record-low rates.

"I'm sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates," Obama said. "No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won't add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust."

The fee on financial firms with more than $50 billion in assets would fund any program losses on refinanced loans, administration officials said. It's a version of the bank tax the administration first proposed two years ago to recoup the costs of the Troubled Asset Relief Program. There was a smaller version of the tax in last year's budget that would have raised $30 billion. Neither proposal moved in Congress.

According to some estimates, more than 10 million borrowers could refinance their mortgages under the plan. The mechanics, costs and other details will be revealed in the coming days, officials said.

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