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Obama: Speed Underwater Mortgage Refis

President Obama in his third State of the Union speech last night called on Congress to pass a plan to help millions of underwater home owners refinance into loans with historically low interest rates by charging banks a fee to help expedite these transactions.

“I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates,” Obama 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.”

Congress has previously looked at a proposal to charge banks a fee to help home owners who remain underwater, but it’s not clear from the details Obama provided how similar this plan is to the one Congress has already considered.

NAR, without weighing in on the merits of the fee, says it stands ready to help with any effort to streamline the mortgage refinance process. Beyond that, NAR calls for making the struggling housing market a national priority, because until housing recovers, the economy can’t recover. “REALTORS® believe that 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,” NAR President Moe Veissi said in a statement released last night.

Obama also talked about efforts to hold lenders to account for making loans during the housing boom they knew households couldn’t afford. He said he’s asking the U. S. Attorney General to create a unit of federal prosecutors and state attorneys general to expand investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. “This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans,” he said.

He also pointed to provisions in the big Wall Street reform law enacted two years ago that’s intended to make future bank bailouts unnecessary by requiring financial institutions to provide the government with a plan for the orderly wind-down of their operations should they become insolvent. “The rest of us are not bailing you out ever again.” he said.

To help create what he called more tax fairness and to help reduce the federal deficit, the President talked about tax code changes so that “millionaire” taxpayers pay tax rates of at least 30 percent, while taxpayers earning under $250,000 wouldn’t face any increase in taxes.

More broadly, Obama spoke about tax code changes to encourage businesses to keep manufacturing and other jobs in the United States or return them to the country if they’re already outside it.

In the video clip above, President Obama describes his plan for helping underwater home owners refinance theur mortgage.

Watch the speech in its entirety.

Read a transcript of the speech.

NAR’s statement.

More on NAR’s Home Ownership Matters efforts.

Robert Freedman

Robert Freedman is manager of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at rfreedman@realtors.org.

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Comments
  1. Debby Bonisolli

    You actually believe Obama this time? He’s been saying this for years and meanwhile the average homeowner just keeps getting deeper in trouble. I have one buyer that’s been waiting 5 months for a Short Sale approval. Two other buyers lost the homes they were waiting for since the banks opted for foreclosure so they could collect on the “insured loan.” Obama needs to stop telling Americans that he’ll do something to help. All he does is create more and more task forces and eat up more of our tax money.

  2. Kathy Fuhriman

    How would this plan be different that Obama’s past Making Home Affordable plans? The big banks responded unfavorably to that program and denied most of the modifications. The banks were supposedly to be paid a fee for approving a mod, which turned out to be another way to string along struggling borrowers until the bank foreclosed. Just how does Obama think he will be able to make the reverse stick in charging the bank a fee this time?

  3. Mike Liberatore

    This will still not help many people. The $3,000 a year average is based on $250,000 loan at 6% dropping to 4.5%. In our market there is virtually no one who fits that scenerio. Also, they still have to owe over 80% ltv and cannot have any lates in the last 6 months and no more than 1 in the last 12. Those people have no reason to sell, so it does nothing to create new buyers or sellers. The White House has no real quality plan to help housing recover. There has to be jobs. No one lends or refinances the unemployed or underemployed.

  4. Will this new refi include the people that are in over $729K and not under Fannie and Freddie? There are many homeowners out there that are in this situation,
    they have excellent credit, under water, income had decreased for one reason or another, and keeping their heads above water by just using their savings. Are we ever going to see the principal reductions?

  5. Everything this President had to say was the biggest “Short Sale” of the last 3 years.
    He’ll say anything he thinks will get him elected….it’s just more rhetoric!

  6. John Erickson

    It’s called pay to stay. I have helped many avoid foreclosure however people that are foreclosed on I have no sympathy. Every closing I have beento the LO say pay to stay….. I had to get a small Townhouse because banks are not lending due to all the fraud homeowners did years ago and yes alot of people and entities commited fraud… Where is my free house? Mine is paid for where is my fre hand out for doing the right thing???? Im not heartless guess im jealous….

  7. I don’t know how I feel about “forced refinances.” Is Obama saying that the banks would need to pay a fee if they didn’t allow people to refinance? Or would they give banks financial incentives to encourage them to give refinances to people who wouldn’t otherwise qualify?

  8. If the banks would allow underwater loans to be refinanced at today’s low market rates, even without a pricipal reduction, it would save many thousands of homes from foreclosure and potentially put many untold billions of dollars back into the economy. For those homeowners that are scraping every dollar to make payments on insanely high mortgage interest rates this relief would be welcome beyond imagination. Give this to the people that have been toughing it out and keeping their owner occupied mortgage payments up at great sacrifice. Moral would skyrocket! Come on now, get it done!

  9. Valerie Ulrey

    I believe the President will attempt to act on this plan… the problem will be getting support from both sides of the aisle so that it will pass!!!
    I myself have benefited from making homes affordable program TWICE. I have successfully modified my loan to drop my interest rates twice in the past 3 years! As a Realtor, obviously, I have taken a hit in my income. Without this program, I would have lost my own home… so… Yes, I believe in these programs!

  10. The first thing he did right was to finally get someone looking into the way monopolies are being created in the REO servicing industry. Let’s nip that now, even though the bud is already blooming. Next! opening all the pillars of economic problems for review by the public at large was very smart. Putting corporations, Banks and Hedgefunds on notice that allowing off shore $$ hoarding and multi-country companies from being able to sell America without having to take legal and social responsibility will finally be scrutinized by everyone effected. Putting a stop to subsities to Banks and Oil companies who have squandered their leg up asssitance from the governement in favor of exhorbatant profits while ignoring accountablity to all tax payers in general is refreshing. Eager to see where this goes.

  11. Dan

    I really believe this is a mistake!!! Obama is not going to do anything.. I’m a Realtor and hearing it.. its a joke!! He’s all mouth and show..ha..

  12. Carolyn K

    All he does is keep blowing smoke and making empty promises to consumers. I have seen so many of these home owners lose everything do to procrastination on the part of the bank. Continued request for information that has already been submitted. Anything to stall in my opinion. I have strived to help every homeowner I can even in the process of a modification. Why, because I care. Homeowners need our professional help in any way we can give it. Give back to the communities that have given us an income. Help give your homeowners hope. People need action not empty promises.

  13. julie

    may be too late for me. my loan resets May 1, so I will be paying hefty interest fees

  14. DAVID

    OBAMA SAY’S A LOT, DOES VERY LITTLE!!!!!!!!!

  15. Yes, it’s true that Obama and the administration have consistently made efforts to require banks to assist struggling homeowners without much success. But at least Obama keeps trying, and to make this a priorty in his state of the union address means he understands the hardship this housing market collapse has caused millions of Americans and our ecomony. Let’s face it, Obama, can’t do this on his own. He needs the help of Americans calling our representatives to enact legislation with proper enforcement that finally gives banks the sticks and carrots needed to turn this around and make sure it never happens again.

  16. I am so sick of hearing all the good that Obama is doing for our industry. He’s done nothing but destroy it with his tax increases that kill jobs and his healthcare bill that he forced on everyone but those in Congress and himself that now keep companies from hiring due to future tax burdens. It’s a joke. We need to get real change in Washington and look for candidates that are actually going to make people more prosperous, not grow government. A healthy job market and a good jobs program will do so much more for the housing market than hand outs. We need hand ups that will actually stimulate the economy, not more legislation which caused this housing mess in the first place. Get rid of the Dodd-Frank bill for starters.

  17. April

    it seems the government wants to help homeowners who are only under federal government loans, what about those under water who are not under Freddie or Fannie loan. who will help them from foreclosures. dont help some and not all

  18. I agree with Debby Bonisolli. The Obama Plan is a good one, but the banks will do a few loans, and then say they are, but the banks won’t. Because they do not have to; Due to investor formulas that Banks adhere to for their investors to be able to make money. If the investor isn’t making money, then there will be no short sale, refi, or modification. Just is not going to happen. Wishful thinking though, good plan, just won’t be enforced, because there is always a way out for the banks. They do not have to.

    And I disagree with lenders being irresponsible lending out money to buy houses by consumers. The REAL reason was when all those companies and corporations closed, defaulted, laid off. Gas tycones raising gasoline to over $4.00 per gallon! Which sent a domino effect to raise food & everything else we buy. It was or is irresponsible uppermanagement stealing with thier outrageous pay scales and dishonest practices bring down the fall of companies, corporations, banks. What is next countries!

    It was not the borrowing of the money. It was the loss of jobs, the escalation of gas prices on top of job loss, The cost of living was and is astronomical for those without a job, so forth and so on. Then on top of that without a job one can not pay bills; the next step in the process is a low credit score, and what do employers look at? It is the credit score to hire. A low credit score, and begets no employment; next the employer looks at someone else to hire. How warpped is that? Honestly, please. The system is keeping the economy from rebounding, by surpressing those less fortunate to be able to stay employed to pay mortgages and bills.

    Quit putting the almighty dollar first.

    Zig Ziglar said it Best:

    “You can have everything you want in life, if you help enough other people get what they want”

  19. angela

    It’s rediculous that 3% of modification applications get approved. It’s a lot of work and those banks took bail outs – they owe the American public the current interest rates regardless of their qualifications -whether it’s job, income, assets, or equity in the home. I think if someone has made their payments, give them the lower rate and help them out….. Instead they WANT to foreclose…They aren’t very smart..They are losing their butts selling them but they want that mortgage insurance. Guess what???? I don’t even have MI & I can’t get a modification due to the dates of origination on our mortgage. STUPID. We’ve made payments for 5 years but our loan was refinanced 6 months after their cut off date. we’ve even had medical issues with our daughter and hubby lost job 2 years ago…

  20. Realtor

    ………..What would happen ” IF” Not One Single American voted on election day for either side (democrate or republican) ……..???

    “They” would not have a job….(like most of us).
    ….however , UNLIKE …all of us…….”They” do not have the money issues and worries that All Americans have when we lose OUR JOBS.

    Voting is nothing more than “whose going to SCREW YOU THE LEAST ” !

  21. Helen K

    I have been trying to close short sale with one bank that has been looking at a Cash offer for over 1year. I need a suitcase to carry the file after submitting everything requested. Now I get a call that it is approved for short sale but it has to close in 4 business days or it is set for foreclosure 7 days after. Everyone is hustling on this side and the title company is trying to expedite everything while meeting their busy end of month closing schedule. Pray for relief! Respectfully submitted.

  22. Numerous problems with this one size fit’s all mentality.
    1. Foreclosed homes are going on the market at less than what they have been taken back for. One case in point a seller I know owed $200,000.00 on his home the bank foreclosed turned right around and listed it for $96,000.00 which of course it sold for right away. That in turned left the owner without a home (instead of working with him) and the surrounding home owners saw their homes worth less it’s a vicious cycle.
    2. It’s destroying the equity many long term home owners had in their homes and a majority of these owners are the elderly who have lived in their home for 15-20 years or more, money they could have used to downsize & live a little more comfortably.
    3. Owners can’t refinance because their equity is now gone (thanks to the lenders dumping these foreclosed homes on the market at ridiculous prices) and the bank won’t refinance them at a lower interest rate.

    Perhaps a better solution would be for the banks to list the home at the price it was foreclosed on then every 30 days drop the listing price 5% or so.

    2. Instead of short sales the owners get a much needed break i.e. the first 25% of their mortgage is interest free for 5 years the other 75% is refinanced at the going rate. In the meantime lift some of these darn regulations that are sending the businesses over seas and start giving insentived to bring them back getting everyone back to work so they can afford their mortgage and eat too.
    Just an idea…..

  23. Same song….Different verse….We owe $ 304k…current value is $ 125k (Southern California). Loan not owned by FNMA/FHLMC. B of A (Was Countrywide). Re-fied 2006. By what I have read there isn’t an avenue for us and we are NOT alone. Let’s pray they come up with a principal reduction and interest rate adjustment.

    3 years ago husband was let go (Building Industry) Road it out now future is bleak. He qualifies for SS but savings are exhausted and retirements has faded.

    WE ARE NOT ALONE….

  24. Daniel Castro

    It’s a shame many of us don’t understand that for a President to move this country forward he needs partners in Congress to do so. Unfortunately this Republican Congress has not and will not cooperate. The writing was on the wall early in his Presidency when then Mitch McConnell bluntly said that the Republican party’s main goal was to get the President out of office after his first term. So much for open mindedness on behalf of the Republicans. Let’s be honest, if the President hadn’t bailed out GM 3 years ago, they would have gone under along with thousands of jobs, We must remember that not only GM would have gone under but a majority of GM’s suppliers such as Delphi (a few more jobs) would have vanished. Let’s also not forget that he inherited a mess that Bush left him and that most independent economists believe that if the Gov’t had not intervened in the private sector, we very well could have sunk into a depression…not a recession. By the way, where are the jobs that the Bush tax cuts were supposed to generate??? Recommend that we open our eyes and see something other than FOX news. Gingrich or Romney for President-plse. tell me your joking. Gingrich will lead us into a nuclear war and Romney will line the pockets of his cronies.

  25. sandy kerry

    I recently saw an e-mail that said we have a tax coming in 2013 . The note said it is part of the health care program. It put an 8% tax on homeowners selling their home after 2013. Please tell me this is not true.

  26. Marilyn Hale

    The only way to fix the economy is to elect someone who cares about America and keeps their word. If the the people in America can’t see through the lies we’ve been told over and over and elect Obama again, we deserve what we get. If America falls, the whole world falls. A good President, with leadership skills, can work with Congress and get things going with them again. Obama can’t!!!!

  27. MB

    Mr.Obama wants to send another bill to Congress to help home owners who are under water.This formula has not helped much to home owners, because of the simple reason that the information banks are looking for is not most of the time practical or even if the home owners explain, banks do not see them reasonable, even if home owners are true, but are unable to satisfy banks. Then again what about the home owners who are some how paying mortgage but having difficulties. Why not the Govt. make thing simple? Instead of going through all thes hassles, just ask the banks to charge the current market interest from home owners, may be upto a certain median price. This may help a lot of home owners who are under water or who are having difficulty in paying the mortgage. This will uniformally compensate every home owner equally and then home owner under water will not have to go through the hassles and approve by the bank, but by themselves.

  28. audreyhartmark

    This is Obama’s Plan. What is the National Assoc. of Realtors (N.A.R.) plan to change the situation to support home owners and the real estate industry? The National Association of Realtors (NAR) has recently raised their fees and has made their fees mandatory on all real estate agents in this challenging economy.

  29. Lakshmi Yokoyama

    If HARP 2.0 only helps 1000 people from losing their home because they can get a refi even with a house that’s under water, that’s still 1000 fewer homes that might eventually go into foreclosure. At least people will not try to stratigically default, something that’s in the back of the minds of my clients who continue to make mortgage payments inspite of the fact their mortgage balance is larger than what their home is worth.
    The biggest challenge will be when the Lenders get done with adding their “overlays” which they always do. If not for these lender overlays we would be able to help so many home owners!!!!

  30. Linda Martin

    Your emails are entertaining, most of you think the president can just waive a wand and make it all better, he can not do it alone, congress has to agree too, he goes up against so many people in the government that does NOT have to worry about thier finances or losing thier homes. They don’t live in the real world. I think the president is at least starting somewhere, the banks just keep finding loop holes, thats what crookes do…I own another business besides being a realtor and I applied for a home affordable program way in the beginning and got my interest rate lowered or I could have lost my home. It was a lot of paperwork and time but it was worth it. I have heard from some people the process has gotten easier. Everyone wants to point blame, lets just get together to help the problem, that is more productive….

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