We Can't Wait To Help Homeowners Refinance Their Mortgages
In a typical recession, this is how you expect a recovery to get its legs: Growing families begin to invest in new homes. That investment works its way through the economy. Builders, suppliers, realtors, and the broader community all benefit.
Today, that isn't happening.
In 2006, the median home price in the United States was $227,100. By May of this year, that price had fallen to $158,700.
Already, at least 5 million people have lost their homes due to foreclosure, and today, one in every three homes purchased is the product of a short sale or a foreclosed property.
Worse still, across the country, nearly 11 million owe more than their property is worth.
Millions of these people have done everything right. They've paid all their bills and kept current on their home loans. But right now, they're stuck with higher payments because their mortgages are underwater. They're not eligible to refinance because the decline in home prices have made their property worth less than what they owe. And that's a problem President Obama knows must be addressed.
All of these factors have contributed to a climate where new homes are being built at the lowest rate since World War II and where homeowners feel trapped by financial circumstances outside their control. Those two things together are holding back the recovery.
We can't wait to help homeowners. The situation is too serious, and too much good can come from improving the state of housing in this country.
So today, President Obama is taking action. It starts with finding ways to allow homeowners to refinance their mortgages.
The Home Affordable Refinance Program is designed to do just that. To date, it's already helped nearly 1 million homeowners improve their financial situations. But up until now, eligibility regulations and costs associated with the program have kept it from having a wider impact.
Now, a new set of rules will open the program to nearly anyone with a mortgage backed by Fannie Mae or Freddie Mac -- no matter what they owe -- so long as they are current on their payments, have no late payments in the last six months, and have not made more than one late payment in the past year.
The group that manages the program, the Federal Housing Finance Agency, will also waive a set of unnecessary costs and fees that were dissuading some from taking advantage of the program and work to get rid of certain restrictions in order to increase competition among lenders.
Millions of individuals could see up to $2,500 in savings every year.
But good as this program might prove to be, alone it won't be enough. The thing that pushes most homeowners into foreclosure is unemployment. Knowing that, Congress still has the opportunity to pass a housing program with sweeping potential -- the American Jobs Act.
Until they do, President Obama isn't waiting on lawmakers to take action. Today's announcement is just the start of things this Administration will do to get the economy growing again -- even if Congress refuses to make jobs a priority.
President Obama also can't wait for Congress to: