Mortgage Foreclosure & Refinance Resource

Republican lawmakers want a fiscal stimulus bill of nearly $900 billion to include a provision that would drive down mortgage rates to as low as 4 percent in an effort to jumpstart the moribund housing market.

The plan would shave more than a percentage point off the current 5.1 percent rate on a 30-year mortgage, which could lower monthly payments by $237 on a $400,000 home loan.

“You ought to go right at housing first,” Sen. Mitch McConnell, the Republican minority leader, told reporters on Monday. “We have already indicated that we think this 4 percent mortgage proposal… is something that can work and make a difference.”

Fannie Mae and Freddie Mac, the two largest U.S. mortgage-finance companies, would soak up the new loans and the program would be capped at $300 billion, according to a Republican outline of the plan.

Proponents of the rate-lowering plan argue that it will both entice prospective buyers into the market and lower homeowners’ borrowing costs, leaving them with more cash to spend.

President Barack Obama’s economic team is considering the idea and so are Senate Democrats, Sen. Charles Schumer said on Sunday.

“Getting mortgages down … that’s a good idea,” the New York Democrat said in an interview on CBS’s Face the Nation. “The administration is exploring it.”