Obama announces new housing refinance plan

View Photo Gallery — President Obama on Wednesday is expected to roll out new proposals aimed at helping troubled homeowners. Here’s a look at the Obama administration’s efforts in trying to help homeowners over the years.

By David Nakamura and Brady Dennis, Updated: Wednesday, February 1, 10:46 AM

President Obama on Wednesday rolled out new proposals aimed at helping troubled homeowners, including a plan that would allow more borrowers to take advantage of record-low interest rates and lower their monthly mortgage payments.
Up to 3.5 million people who do not currently have federally backed loans might be eligible for the program, administration officials said. Another 11 million people who currently hold government-backed loans from Fannie Mae and Freddie Mac also could potentially benefit.

inShare

Home prices drop again — How does your city stack up?: The Standard & Poor’s/Case-Shiller home price index offers a monthly asssessment of how home prices are faring from city to city. In the most recent report, from November 2011, only one city saw an increase in prices for the month.

Gallery

 President Obama’s reelection campaign is raising money and reaching out to voters and volunteers.

The renewed efforts, which the president announced late morning at the James Lee Community Center in Falls Church, were foreshadowed during Obama’s State of the Union address last week. They mark another of a series of initiatives aimed at lifting the nation’s ailing housing market as consensus is growing rapidly that the housing woes are holding back the economic recovery.
ANALYSIS: When will housing bounce back?
“It triggered the worst economic crisis of our lifetimes,” Obama said of the housing bubble that burst four years ago. “And it has been the single biggest drag on our recovery from a terrible recession. Crushing debt has kept millions of consumers from spending. A lack of building demand has kept hundreds of thousands of construction workers idle. The challenge is massive in size and scope.”
A central piece of the president’s plan would allow qualified homeowners to refinance their mortgages at current historically low interest rates. Unlike earlier proposals, the new refinance measure would cover not only home loans guaranteed by federal mortgage giants Fannie Mae and Freddie Mac but also those owned by private investors, according to senior administration officials.
The cost of undertaking those refinancings, Obama said last week, would be paid for by a fee on large financial firms to ensure “it won’t add to the deficit and will give those banks that were rescued by the taxpayers a chance to repay a deficit of trust.”
Yet Republican lawmakers have opposed taxing banks to pay for new programs, and the new proposal’s estimated price tag of between $5 billion and $10 billion could meet resistance on Capitol Hill.
“It will take more time than any of us would like for the housing market to recover from this crisis,” Obama said in Falls Church. “And government certainly can’t fix the entire problem on its own. But it is wrong for anybody 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.”
Obama made the announcement as the Republican presidential primary heads next to Nevada, where Las Vegas has become known as the foreclosure capital of the nation. As he makes his case for reelection, Obama has tried o draw a stark contrast with Republicans by promoting a role for an activist government that provides relief to Americans feeling the strain of high unemployment and mortgage problems.
The Republican National Committee mocked Obama’s plan Wednesday, predicting that it would get tossed into the “alphabet soup” of housing proposals the administration has offered over three years that have “failed to keep millions of Americans in their homes.”