The last time foreclosures were this prevalent in the United States was during the 1930′s. During this time lenders were not willing to refinance outstanding mortgages so the government created the Home Owners Loan Corporation (HOLC) which refinanced US citizens, but at the governments risk if the borrower was unable to meet his/her loan obligations. 

A lot of people are trying to refinance given the fact that mortgage rates are unprecedentedly low right now, although it is not always so easy as banks have the same fear that occurred in the 1930s. 

The borrowers that it currently makes sense to refinance are the ones with loan balances over $400,000, due to the fixed costs associated with refinancing, have a credit score of above 800 and have more than 20% equity in their property. 

The reason banks are being so hesitant is because they need to securitize their loans that are often sold to organizations like Freddie and Fannie. Banks need to build the trust of these investment firms by being pickier about whom they give these loans out to. In addition, banks are making more and more borrowers get insurance on their loans to make it more appealing to buyers. 

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