I have less of a problem with this than with principal reduction schemes. Like UCGal mentioned above, this would give borrowers a chance to get a lower rate with a standard 30-yr FRM.
It’s not that I like it; but if they are already in the loans, and depressed values are the only thing standing between them and a refi to a lower rate, I don’t have a problem with it.
BTW, I don’t think this is going to have much of an impact on the housing market.
