Obama’s proposal would give homeowners with privately held mortgages a shot at record low rates though a new government program, for an annual savings of about $3,000 for the average borrower.
The program is the latest administration effort to help homeowners in the face of a massive number of foreclosures and plunging house values that have left millions of borrowers owing more than their homes are worth. The administration plan aims to ease the way toward refinancing for borrowers, who despite good credit have been unable to take advantage of lower rates because they are underwater on their loans or because banks fear they will be left taking losses.
The administration has rolled out housing programs before with the hope of helping millions of struggling homeowners. But those initiatives have fallen short.
“I’ll be honest, the programs we’ve put forward didn’t work at the scale we’d hoped,’’ Obama said. “Not as many people have taken advantage of it as we wanted.’’
The housing issue, while national in scope, resonates particularly in election battlegrounds like Nevada and Florida, which have faced record foreclosures. Obama himself drew attention to the politics surrounding the issue with an indirect jab at former Massachusetts governor Mitt Romney, the front-runner in the Republican presidential contests. Romney in October suggested the foreclosure process should “run its course and hit the bottom.’’
Without naming Romney, Obama said: “It is wrong for anyone to suggest that the only option for struggling, responsible homeowners is to sit and wait for the housing market to hit bottom. I refuse to accept that, and so do the American people.’’
The administration proposal faces a major hurdle in Congress. The program would cost between $5 billion and $10 billion, and the administration proposes to pay for it with a fee on large banks.
About 11 million Americans, roughly 1 in 4 with a mortgage, are underwater, according to CoreLogic, a real estate data firm.
— Associated Press
