The Obama Refi Plan Held Back by Investor Concerns?

By now you've heard all the talk about the White House plan to hit a button and automatically refinance $2 trillion of Fannie Mae and Freddie Mac loans. The idea is to help both current mortgagors with LTVs north of 100% and late payers who are contemplating a strategic default. On Tuesday the president is expected to make a national 'jobs' speech with a sentence or two (possibly) about the refi plan. A bigger speech on the topic could come by month's end. Meanwhile, we're told that one concern about refinancing so many loans is that it will reduce the yield to MBS investors – namely China. But keep in mind that the GSEs own their own bonds as well, which means they potentially will earn less money if the note rate is slashed to 4% from 6%.