Obama: Housing Plan Will Help 7-9 Million Families Restructure, Refi
19 February 2009 - 2:32AM
Dow Jones News
President Barack Obama unveiled plans to help 7 million to 9
million families restructure or refinance their mortgages, warning
that the housing crisis could stretch far beyond troubled
homeowners if unaddressed.
"In the end, all of us are paying a price for this home mortgage
crisis," Obama will say in a speech in Phoenix on Wednesday. "And
all of us will pay an even steeper price if we allow this crisis to
deepen - a crisis which is unraveling homeownership, the middle
class and the American Dream itself."
The broad features of the plan emerged Wednesday morning: a new
$75 billion homeowner stability initiative designed to reach 3
million to 4 million at-risk homeowners, refinancing for up to 4
million to 5 million responsible homeowners and new capital for
Fannie Mae and Freddie Mac.
Addressing concerns that the plan could be exploited by
homeowners who took risky bets on the housing market, Obama said it
will focus on those who "played by the rules." People whose
traditional mortgages are "underwater" will be eligible for
refinanced loans, while people with subprime mortgages will be able
to modify their loans.
"I also want to be very clear about what this plan will not do:
It will not rescue the unscrupulous or irresponsible by throwing
good taxpayer money after bad loans," Obama said.
Obama said that any financial firms receiving, or hoping to
receive, taxpayer financial assistance through the Troubled Asset
Relief Program would have to agree to modify their loan books along
the guidelines established in the housing proposals. Under the
plan, the federal government would cover half the losses incurred
by lenders that work with borrowers to reduce their monthly
payments.
Lenders would be required to reduce those payments to no more
than 31% of a borrowers' income.
-By Henry J. Pulizzi, Dow Jones Newswires; 202-862-9256;
henry.pulizzi@dowjones.com