The combination of Federal Reserve efforts to pump liquidity into the financial system and government assistance to refinance mortgages will save homeowners an estimated $11.5 billion in home payments over the next five years, according to a new study.

The analysis by Mark Fleming, chief economist for First American CoreLogic, a data and analytics firm belonging to First American Corp., found that the Fed’s interest rate reductions and the Home Affordable Refinance Program enabled homeowners who refinanced in the first half of 2009 to reduce monthly payments an average $120, or 10.5 percent.

These borrowers are projected to save $2.3 billion in mortgage payments. Over the next five years, the total benefit to homeowners who refinanced in 2009 will grow to $11.5 billion, the study estimated.

Together, the Fed and government actions “have allowed more than 2 million consumers to reduce their monthly mortgage debt obligations and put more money in their pockets,” said Fleming.

The permanent increase in monthly income will help boost consumption and drive growth as the economy rebounds, he said.

Moreover, the refinanced loans are likely to be more sustainable debt obligations, with lower payments and fixed-rate terms reducing the risk of foreclosure.

The study drew on the firm’s public-record database, which covers 96 percent of the U.S. population. It analyzed more than 2.2 million residential mortgage refinancings that occurred between October 2008 and June 2009.

First American CoreLogic says it is the country’s largest provider in the United States of real estate, property, ownership, fraud, mortgage, and mortgage securities data. It provides analytics for the assessment of real estate sales, collateral valuation, and home price trends, among other services.

 

09/18/2009 By: Darrell Delamaide    http://www.dsnews.com/articles/stimulus-measures-will-save-homeowners-115-billion-2009-09-18