Breaking down Obama's housing plan
President Barack Obama makes remarks on the home mortgage crisis at Dobson High School in Mesa, Ariz.
TEXT OF STORY
Bob Moon: You work hard, and you're paying your mortgage, so why should the guy down the street get a break? Now that he's in over his head and facing foreclosure? Don't worry, says President Obama. The new mortgage-rescue plan he unveiled today won't reward folks who bought a home that they knew from start they couldn't afford. And for everybody else who owns a home, perhaps you could call this the "nine percent" solution -- keeping your neighbor from pulling you down, along with him.
PRESIDENT OBAMA:One study in Chicago found that a foreclosed home reduces the price of nearby homes by as much as nine percent.
That's one of the primary goals of the plan -- to put a floor under sagging home prices. But as Ronnie Radbill reports from Washington, the fix itself comes at a steeper-than-expected price tag -- an estimated $75 billion.
RONNI RADBILL: President Obama says America faces a crisis unlike any we've ever known. Speaking today outside Phoenix, Ariz., he says the plan will help four million homeowners facing foreclosure. The government will do that by giving lenders matching funds to cut monthly payments.
President Obama: This plan will not save every home but it will give millions of families resigned to financial ruin, a chance to rebuild.
The plan will help another five million borrowers, who owe more on their mortgage than what their home's worth, to refinance, a move that until now has been quite difficult.
To get that help, mortgages need to be owned or guaranteed by Fannie Mae and Freddie Mac. Under the plan the two mortgage giants will receive the cash they need to assure there's plenty of available credit.
President Obama: Through its existing authority Treasury will provide up to $200 billion in capital to ensure that Fannie Mae and Freddie Mac can continue to stabilize markets and hold mortgage rates down.
But, what about the majority of Americans who are up to date on their payments? Tom Lawler a former Vice President of Fannie Mae says the plan does nothing for them.
TOM LAWLER: What about the people who don't get that help but also make their payments on time? I think that'll be an enormously unpopular element.
Treasury Secretary Timothy Geithner says homeowners should experience some relief quickly, after the plan goes into effect March 4th.
In Washington, I'm Ronni Radbill for Marketplace.