Obama bypasses Congress with mortgage plan
LAS VEGAS — President Barack Obama traveled Monday to Las Vegas, epicenter of the real estate meltdown, to unveil a plan to limit damage from the housing market’s downward spiral on the broader US economy.
Thwarted by Republican opposition to his bigger jobs and stimulus package, Obama plans this week to unveil initiatives that do not need congressional backing, starting with mortgage relief that could help millions of Americans.
The president’s three-day, tri-state tour was to take him first to Nevada, where the bottom has fallen out of the housing market and which has the highest unemployment of any US state — 13.4 percent.
At Monday’s event to be held at 2130 GMT, the president was to unveil various measures that aim to make it possible for cash-strapped mortgage holders to get relief.
Obama travels later in the week to California and Colorado, where he will be highlighting other problems dragging down the economy, including education, the president’s aides said.
“Today, using the mantra ‘We Can’t Wait,’ the president will kick off an effort to put pressure on Congress to pass the American Jobs Act by highlighting a series of executive actions that his administration will take,” a White House official said, underscoring that they would be taken “without help from Republicans in Congress.”
“In Las Vegas, the president will highlight a set of steps to make it easier for some homeowners to refinance their mortgages and later in the week, the administration will announce measures to help students better manage their student loan debt when they graduate.”
Republicans in Congress last week blocked the president’s legislation aimed at boosting jobs, arguing that proposals that include tax hikes will hurt wealthy job creators and only add to the legions of unemployed Americans.
Obama on Monday opted to focus on housing, unveiling a plan that would allow many hard-pressed families to refinance their mortgages, hold onto their homes and hopefully slow the erosion of housing prices in the process.
“We can’t wait for Congress to act, so we are going to take the steps that we can,” said White House communications director Dan Pfeiffer.
The combination of high unemployment and falling home prices has fed on itself since the housing market began to plunge, putting millions of homeowners in default and stalling any recovery in the market.
Part of Obama’s plan is to ease rules governing the Home Affordable Refinance Program (HARP), which allows mortgages backed by financing giants Fannie Mae and Freddie Mac to be refinanced at lower rates.
The HARP program, launched in 2009, aimed to help millions of hopelessly cash strapped homeowners, but in the end, provided relief to fewer than a million borrowers.
Changes to the program would make it easier for homeowners to refinance mortgages and would lift a rule stating that borrowers can’t qualify if their mortgages exceed 125 percent of their homes’ value.
Moody’s predicts that foreclosures will rise next year to a record 1.5 million.
The relief comes not a moment too soon for borrowers whose homes are worth less than their mortgages — homeowners who in the lingo of the industry are said to be “underwater” on their loans.
Shaun Donovan, secretary of Housing and Urban Development, said refinancing could save homeowners $2,500 or more per year, “the equivalent of a substantial tax cut.”
“Any borrower, independent of how underwater they are, is eligible,” he said.