Last Wednesday, February 1, President Obama announced the details of a plan to help homeowners refinance their mortgages in hopes of bolstering the housing market.
According to the U.S. Department of Housing and Urban Development, this proposal will allow buyers to save an average of $3,000 a year by refinancing into loans backed by the FHA, if they are current on their mortgage.
The plan is estimated to cost between $5 billion and $10 billion, which Obama plans to cover by pressing a fee on large banks.
“I want to commend the administration for recognizing that more can be done to get our housing market on track. The programs announced today will give lenders and other stakeholders additional tools to help borrowers and foster a renewed confidence in our real estate finance system,” said David H. Stevens, President and CEO of the Mortgage Bankers Association, in a statement issues on February 1. Stevens went on to note that the MBA believes a single national set of standards can help provide confidence and certainty in the real estate market for borrowers, lenders and servicers alike.
Bob Nielsen, chairman of the National Association of Home Builders, issued a similar statement.
“Clearly, more decisive actions are needed to increase refinancing opportunities, to reduce the inventory of foreclosed homes and to prevent additional homes from going into foreclosure,” stated Nielsen, who says that the NAHB looks forward to working with the Administration and Congress to find constructive solutions in these areas as soon as possible.
This refinancing plan is the most recent addition to Obama’s foreclosure prevention efforts, following the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP).
Reports have indicated that the plan faces long odds in Congress.
House Speaker John Boehner (R., Ohio) questioned why this program would work when others have failed.
“One more time? One more time? How many times have we done this?” he asked reporters. “I don’t know why anyone would think that this next idea is going to work.” He added that the previous programs have led to a delay in “the clearing of the market,” or letting housing prices hit bottom by allowing foreclosures to happen more rapidly.
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