Home owners who’ve made their mortgage payments on time could take advantage of record low interest rates under a plan unveiled by President Obama in his State of the Union speech last night.

The proposed plan would cover home owners with mortgage loans guaranteed by Fannie Mae and Freddie Mac, as well as retail banks. Obama must seek Congressional approval to go forward with the plan.

“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. A small fee on the largest financial institutions will ensure that it won’t add to the deficit and will give those banks that were rescued by taxpayers a chance to repay a deficit of trust.”

Millions of innocent Americans have seen their home values decline, Obama said. “And while government can’t fix the problem on its own, responsible home owners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief,” he said.

Although home owners would benefit from Obama’s proposal, more needs to be done to help would-be home buyers and home sellers, as well as financially troubled home owners, said NATIONAL ASSOCIATION OF REALTORS® President Moe Veissi.

“More must be done to stem the rising inventory of foreclosed homes and address the lack of available and affordable mortgage financing, which is inhibiting a meaningful housing market recovery,” Veissi said. “Our families, communities, the housing market, and economy all suffer when people lose their home to foreclosure.”

Financially troubled home owners need Obama and Congress to take more aggressive steps to modify loans and help home owners significantly reduce their monthly mortgage payments, he said.

Home sellers, meanwhile, need banks to streamline the often time-consuming and inefficient short sale process and to quickly approve reasonable offers when a family is absolutely unable keep their home, Veissi said. Keeping people in their homes and reducing foreclosures will help minimize the negative impact of distressed properties on home values and neighborhoods.

“Expanding financing opportunities could also help reduce excess inventories of distressed properties,” Veissi said. “Increased fees and higher down payments are making it harder for many creditworthy home buyers and investors to obtain financing, thwarting the sale of distressed properties and prolonging the impact those homes have on local markets.”  

National fraud-fighting unit

Mortgage lenders who abused or defrauded mortgage borrowers during the housing crisis would be the target of a new fraud-fighting unit Obama wants to set up.

“I’m asking my attorney general to create a special unit of federal prosecutors and leading state attorney(s) general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis,” the President said.

“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.

Republican response

The Republican response to the speech didn’t specifically address housing, but tangentially touched on the issue. “In word and deed, the President and his allies tell us that we just cannot handle ourselves in this complex, perilous world without their benevolent protection,” said Indiana Gov. Mitch Daniels. “Left to ourselves, we might pick the wrong health insurance, the wrong mortgage, the wrong school for our kids; why, unless they stop us, we might pick the wrong light bulb!”