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I am not sure that Piscator's take in the original post is what the law is about. There currently is the HARP program and I beleive the principle reduction he is talking about is related. Many people qualify under HARP, but certain technicalities are limiting how many people actually get to take advantage of it. My understanding is that the new law is to help people who are in some of those situations. Not paying a mortgage, will immediately disqualify you for either program. If the loan is owned by Fannie Mae, and you have made all payments, and you bought during the peak of the market when prices were higher and rates 2 points higher, you may qualify for a streamlined refinance. You still have to pay for refinancing, closing, etc. However, the idea of HARP is to let responsible people, who pay their mortgage, refinance. To refinance under normal programs, you need equity. If you bought your house in 2004 and paid every single mortgage payment, a regular refi may not happen because with a current appraisal (likely 30% below where it was when you bought) you may not have enough equity. It isn't about people who bought 50000 houses when they could afford 200000, it is about everyone else who bought a house at an artificially inflated price. It can mean $500+ dollars a month in interest saved, it can mean getting a mortgage out from underwater. THose things are desperately needed to get the economy rolling.
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