It was nice to finally hear a politician talking about solving our housing market woes — the bull’s-eye in terms of economic recovery.
Aiming to strike a populist chord with voters, President Barack Obama asked Congress Tuesday night during the State of the Union address to pass a mass refinancing effort that would help home owners take advantage of today’s lower mortgage rates.
“I’m sending this Congress a plan that gives every responsible home owner the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates,” the president said. “No more red tape. No more runaround from the banks.”
The proposal is an extension of the administration’s Home Affordable Refinance Program, which made it easier for home owners with loans owned or backed by Freddie Mac and Fannie Mae to refinance at record low interest rates. The proposal would broaden refinancing opportunities to home owners whose loans aren’t backed by the federal government.
To pay for the plan, Obama said that a small fee on the nation’s financial institutions would be implemented to ensure that the plan is deficit neutral.
Although Obama’s words were music to the ears of many home owners (especially since politicians on both sides of the aisle have been relatively mute on housing issues) — more needs to be done to help underwater home owners modify their loans and encourage banks to streamline the lending process. In the weeks ahead, Obama needs to leverage his refinancing proposal by emphasizing it on the campaign trail and letting every home owner know how easier rules and lower interest rates will help them.
Housing is a key driver of the economy. The NATIONAL ASSOCIATION OF REALTORS® estimates that for every two homes sold, one job is created. Plus, housing accounts for more than 15% of the U.S. gross domestic product. In past recessions, a rebound in housing has usually been one of the first signs that economic conditions are improving.
Besides stepping up refinancing efforts with banks, the president outlined the creation of a new mortgage fraud unit to investigate misconduct by lenders. “This new unit will hold accountable those who broke the law, speed assistance to home owners, and help turn the page on an era of recklessness that hurt so many Americans,” Obama said.
As we get closer to Election Day, the need for comprehensive housing solutions must not become just populist rhetoric in a speech. Effective housing policy is too important to too many Americans to be lost in election year jockeying.
In fact, housing and mortgage issues are make-or-break election issues for many voters and perilous territory for politicians. In a recent survey of voters, 60% believe dealing with mortgage and foreclosure issues is key to stabilizing the economy, including 57% of Republicans and 66% of Democrats.
The clearest way for Obama and his Republican opposition to prove to the American people that they’re fighting for the interests of their fellow Americans is to help home owners by making housing a priority.
What did you think of the comments President Obama made about housing issues and mortgage lending?