Mortgage refinance package to lower fees for 3 million homes

Obama's mortgage refinance package could save certain homeowners $1,000 a year. This mortgage refinance package, announced Tuesday, targets up to 3 million Americans.

Susan Walsh/AP
Mortgage refinance package could lower fees for up to 3 million homeowners. Pictured, President Barack Obama speaks about the mortgage settlement, Thursday, Feb. 9, 2012, in the Eisenhower Executive Office building on the White House complex in Washington.

As many as 3 million homeowners could save about $1,000 a year because of a reduction in fees, announced Tuesday by President Barack Obama, on refinancing their government-backed mortgages.

In addition, the White House said it was taking new steps to help military members whose homes were improperly foreclosed by large mortgage servicers.

Among the steps, the servicers have agreed to conduct a review overseen by the Justice Department of all foreclosures of military members since 2006 to determine if they violated a federal ban on such actions for active duty service members. Any violations will result in the servicer paying the military member's lost equity, plus interest, plus $116,785.

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The moves were the latest by the Obama administration to address the struggling housing market.

"While the government cannot fix the housing market on its own, the president believes that responsible homeowners should not have to sit and wait for the market to hit bottom to get relief when there are measures at hand that can make a meaningful difference," the White House said.

The broadest step is a reduction of refinancing fees by the FHA on mortgages it backs. By significantly cutting the fees to refinance loans made before June 1, 2009, the typical borrower could save about $1,000 a year because of lower mortgage payments. The FHA has had to raise fees in recent years to offset losses on badmortgages.

The administration estimated 2 million to 3 million homeowners would be eligible for the reduced fees, which would be part of the FHA's existing program to streamline refinancings.

The moves for military members also include a review to see if they were charged more than 6 percent interest after making a valid request to lower the rate. Such a rate reduction is required under the Servicemember Civil Relief Act.

The review will be conducted by servicers, again under Justice Department oversight, of mortgages dating to 2008. Servicers would be required to compensate military members who were overcharged with a payment equal to four times the amount overcharged, plus interest.

RELATED: Want a suburban home? Top 5 most, least expensive cities.

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