Obama Proposes Housing Plan
February 1, 2012 by staff
Obama Proposes Housing Plan, President Obama unveiled a plan Wednesday that would make millions of homeowners eligible to refinance their homes, even if they owe more than the homes are worth.
The plan, which includes incentives for homeowners to increase their equity rather than pocket the savings, builds on an earlier effort by the administration to boost refinancing for those with federally backed mortgages. The White House said it would save homeowners an average of $3,000 a year.
“There are more than 10 million homeowners across the country right now who, because of an unprecedented decline in home prices that is no fault of their own, owe more on their mortgages than their homes are worth,” Obama said. “Here in Falls Church, home values have fallen by about a quarter from their peak. In places like Las Vegas, more than half of all homeowners are underwater.
“It will take a while for those prices to rise again. But there are actions we can take, right now, to provide some relief to folks who’ve been making their payments on time.”
The new effort requires legislation, which means congressional Republicans would have to go along for more homeowners to reap the benefits. One potential problem: the $5 billion to $10 billion plan includes a fee on large banks to prevent it from increasing the federal deficit. The administration has failed to get previous proposed fees through Congress.
“We need them to act,” Obama said, drawing snickers from several hundred people assembled in a community center here. It was one of several digs he made at Congress in the short, 20-minute speech. “But we’re not simply going to wait for Congress.”
The refinancing plan, combined with earlier efforts, marks the latest attempt by Obama to solve a problem that was at the root of the 2007-08 recession. When housing prices collapsed, millions of homeowners were left with mortgages they couldn’t afford and homes that were worth less than what they owed.
Obama warned it will take years more to recover. “This was a big bubble, and when it burst, it had a big effect,” he said.
The plan is of huge importance in many states that could decide the presidential election in November, including Florida, Nevada and Arizona.
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