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President Obama announces mortgage refinance plan
U.S. President Barack Obama holds up a one-page mortgage application form that he proposes as he delivers remarks on the economy Feb. 1, 2012 at the James Lee Community Center in Falls Church, Va. Obama spoke on the mortgage principle reduction plan he had mentioned in his State of the Union address.
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Adriene Hill: President Obama this hour presented new plans to help fix the struggling housing market. Among his proposals, he wants to make it easier for homeowners to refinance their mortgages.
For more, we go live now to Marketplace's Nancy Marshall-Genzer. Good morning Nancy.
Nancy Marshall-Genzer: Hey Adriene.
Hill: So, we knew the plan was coming, now we've got the details. What's actually in it?
Marshall-Genzer: Adriene, there's lots of stuff in here, but the part of the president's plan that's getting the most attention is what you just mentioned: refinancing. This part of the plan would make it possible for a big block of people whose homes have fallen so far in value to refinance that banks haven't even considered them.
President Obama says his plan would help them.
Barack Obama: What this plan will do is help millions of responsible homeowners who make their payments on time, but find themselves trapped under falling home values or wrapped up in red tape.
Adriene, the administration says this part of the plan would cost $4 billion to $10 billion It also wants to spend about $15 billion on another part of the proposal that would fix up foreclosed homes.
Hill: Any thoughts on whether this is going to actually help homeowners? We've seen a lot of housing plans kind of fizzle in the last few years.
Marshall-Genzer: Yeah, we sure have. And a big hurdle for this plan is that spending I just mentioned -- it would have to be approved by Congress.
I talked about this with John Taylor. He's head of the National Community Reinvestment Coalition.
John Taylor: It's critical that Republicans and Democrats put aside their biases, their intentions around elections and so on, and really pull together to try and stabilize our housing market.
And Adriene, that will be especially difficult -- and maybe impossible -- in an election year.
Hill: Marketplace's Nancy Marshall Genzer, thanks.
Marshall-Genzer: You're welcome.
This is the problem of low down payment mortgages, and letting people extract equity from their homes to get into the same position. This is a bank bailout under the guise of helping people with underwater loans. Why should the tax payer have to take over the bad debts of private banks? We need to let the foreclosed homes sell at the market price into the hands of young families that don't make as much money as the older generations so they can fix them and live in them. We need to give the younger folks a break since it's they that are making the payments that pay social security payment for the better off older generations. Housing prices went to the moon temporarilily and they're only just recently come back to historical norms with respect to incomes.
