Why refinancing doesn’t happen

This NYT piece went on about why those mean banks aren’t refinancing many loans. The writer finds several people who would like to refinance, and whose home loans seem generally to be higher than the value of their homes. Even with Federal bail-out money earmarked for such a purpose, the loans aren’t happening. Even if people might avoid foreclosure, or even if they have diligently paid their loans and would obviously do so with lower payments, the loans aren’t being refinanced. Unstated is what would seem the real reason for banks reluctance to refinance: to do so will revalue the house. In this market, that will probably lower its value. Making that easy to do will probably create a clamor of other folks wanting to do the same.

Take me.  I would certainly like to refinance at historically low rates. But when I looked into it, I found that the value of my home had dropped to the point where I would need to pay for private mortgage insurance. My current fixed-rate mortgage was at the bottom of the market at the time, so when you add in PMI, my savings aren’t worth the hassle.
There are probably a lot of people like me. When you get right down to it, nobody involved in real estate wants to make it easy to mark homes to their actual market value. I’m surprised no one would say this to the reporter.

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