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Obama mortgage relief plan gets mixed reaction

President Barack Obama speaks outside of the home of Jose and Lissette Bonilla in Las Vegas on Monday. AP PHOTO

By ROBERT DIGITALE
THE PRESS DEMOCRAT

A federal plan to help more underwater homeowners refinance their mortgages drew praise and skepticism Monday as a cure for what ails the housing industry.

Rep. Mike Thompson, a St. Helena Democrat who has been a critic of the Obama administration’s housing efforts, reflected the mixed reaction to the expanded refinancing program. He called the effort a “welcome but incremental change” on the housing front.

“I don’t think it comes close to where we need to be or what we need to do,” Thompson said.

Local loan officers said many clients will likely seek to take advantage of the expanded federal program. However, they said, that still amounts to just a fraction of underwater homeowners.

“Is that really solving the problem?” asked Scott Sheldon, a loan officer with W.J. Bradley Mortgage Capital in Santa Rosa. “I think it’s a band-aid more than anything.”

The expanded effort was announced Monday by federal officials in Washington and touted on the campaign trail by President Barack Obama.

The new rules would allow refinancing for homeowners whose loans belong to the portfolio of government-owned agencies Fannie Mae and Freddie Mac.

Under current rules of the Home Affordable Refinance Program, homeowners can refinance only if their mortgage amounts don’t exceed 125 percent of the home’s value. That 125-percent limit will be lifted, but the details aren’t scheduled for release until Nov. 15. As such, many borrowers may have to wait until early 2012 to apply for refinancing.

To be eligible, borrowers must not have not missed a mortgage payment for the past six months.

Certain fees will be eliminated for those who accept shorter-term loans — down from 30 years to 15 or 20. Such a change won’t provide a big drop in monthly payments but will help homeowners who want to more quickly pay down principal on their loans.

To gain the participation of more lenders, the government has agreed to eliminate requirements that now hold banks liable for “defective loans.”

Officials estimated the expanded Home Affordable Refinance Program might serve about 900,000 homeowners nationwide in the next two years. Thompson noted that remains just a portion of the 11 million underwater homeowners in the U.S., including roughly 2 million in California.

Sonoma County has 27,000 homes with mortgages in excess of value, according to real estate information firm Zillow. That represents about 27 percent of the county’s homes.

Speaking in Las Vegas, Obama said his administration had already taken a series of steps to help homeowners with their mortgages, “but we can do more.” Even so, the president acknowledged the latest proposal alone won’t put the housing market back on its feet.

“Given the magnitude of the housing bubble, and the huge inventory of unsold homes in places like Nevada, it will take time to solve these challenges,” he said.

Thompson called for the government to do more.

“We’re not going to turn the economy around until we get this housing thing worked out,” he said.

For the short term, he said, “I think everybody who has a mortgage today should be able to refinance at today’s rates.”

Kris Anderson, a senior loan consultant for Allstate Mortgage Company in Santa Rosa, called the expanded program good news for plenty of underwater homeowners.

“This might allow them to do a loan that they might not otherwise do,” she said.

Otto Kobler, branch manager of Summit Funding in Santa Rosa, said the program would benefit those with good income and who intend to stay in their homes for more than a few years. That amounts to a portion of all underwater homeowners, he said, but many such owners have become quite frustrated by their inability to refinance at lower interest rates.

“It’s amazed me how it’s driving a lot of people nuts,” Kobler said.

Marty McCormick, president of Alameda Mortgage in Santa Rosa, said the federal program changes little because the homeowners remain underwater and unable to move unless they do a short sale or go through foreclosure.

“They’re still not addressing the bigger problem,” he said.

Sonoma State University economist Robert Eyler said the refinancing program in theory could help the economy by putting more money in homeowners’ pockets and providing some immediate relief from mortgage defaults. Even so, he said, it comes with the risk that it will simply delay the timing of distressed sales and in the end prove a “short-term fix to a long-term problem.”

The Associated Press contributed to this story.





16 Responses to “Obama mortgage relief plan gets mixed reaction”

  1. Kay Tokerud says:

    Too little, too late, close the barn door after all the animals got out. If people are current on their mortgages, what’s their problem? Unless the payments are significantly reduced for those about to default,what good will this do?

    The damage has been done, the loose credit lured everyone into the housing market, then let them out in the cold when credit seized up. The only lasting solution would be to get the government out of the real estate business and allow the free market to control supply and demand.

    If the government really wanted to help anyone, they could have used some of that bailout money to ‘buy down’ the interest rates on subprime loans. And for those who walked away from homes where they put little or nothing down, well they shouldn’t have gotten the loans in the first place and have lost little.

    The big losers are those who didn’t know the market was being rigged and bought property with large downpayments at high prices. They lost their large downpayments when the market tanked. Nothing at all is being done to help those people.

    Heads should roll because the mortgage brokers lied on applications or encouraged borrowers to do so and then the loans were fraudulently labeled triple A loans and marketed as such. This was a giant scam involving the highest levels of our government. It’s time to throw the bums out and vote for anyone who is not getting much money from private interests or the government. Anyone else would be better than the crew we have in there now.

    Thumb up 1 Thumb down 3

  2. Pearl Alquileres says:

    @bear

    Republican? Are you insinuating that the Democrats are not “clowns”? PLEASE!!!

    And “heartless”?

    What is more heartless than trapping millions of people in GOVERNMENT dependency hell just to get a few votes!!?

    Republican clowns strive to give everyone a chance to pursue the American Dream without the heavy had of GOVERNMENT taxing & regulating their every move, deciding who wins & who loses based on who contributes to the war chest & who doesn’t.

    Democrat clowns want to “spread the wealth” but only to those who support THEIR power to decide who’s wealth and how much gets re-distributed to whom.

    If the people making those decisions were decent, honorable people I would be 1st in line to support that agenda.

    But instead we have “clowns”.

    Thumb up 8 Thumb down 3

  3. bear says:

    Show me a republican who is not a clown.

    Correction: a heartless clown.

    Starting with “presidential” candidates.

    Thumb up 5 Thumb down 12

  4. Really Big Fish says:

    Just another Obama vote getting plan using taxpayers money.It is just another way to pay for a vote by using a your federal neighbors hard earned money to bail out those who could afford a house in the first place. The ignorance of those who still support Obama is staggering.

    Thumb up 7 Thumb down 5

  5. Social Dis-Ease says:

    Wow…
    they really ARE in our corner…
    NOT!

    Thumb up 7 Thumb down 5

  6. brown act jack says:

    If the value of your home depends upon the interest on the loan there is something worng with the world.

    If you think the government should force the banks to lower the interest rate, or loan balance to prevent foreclosure of your loan, do you also think the government should force the increase of the interest or the loan balance if the lender needs more money to prevent the lender from going bankrupt.

    If you buy a house today at a 4% interest on the loan, what happens to the value of the home if the interest goes to 6%? If you have to sell the house and the new loans are 6% how much do you think the value of the home will go down.

    A home is not an investment, it is a depreciating property just like a car.

    If you are underwater on the loan, I would suggest you abandon it, before you drown. Refinancing at a loweer interest rate will not make the home more valuable, will it? You will just owe the same money, usually over a longer period of time.

    If you can not afford the home now, what makes you think you can afford it 5 years from now when cost of living goes up, and you run into the same problem of not having enough money to pay for the low interest loan.

    Thumb up 8 Thumb down 7

  7. Nelly says:

    If I wasn’t so broke I was making late payments, I wouldn’t need the stupid loan. This is just a case of “those truly in need” need not apply.

    Thumb up 9 Thumb down 2

  8. Commonsense says:

    “homeowners can refinance only if their mortgage amounts don’t exceed 125 percent of the home’s value. That 125-percent limit will be lifted, but the details aren’t scheduled for release until Nov. 15.” Isn’t this similiar to the “creative” financing that helped to cause the bubble? Looks like it to me, and when implemented, looks like it will have more of a delay effect, then a long term solution.

    Thumb up 13 Thumb down 3

  9. Dogs Rule says:

    Banks invented and then sold “mortgage products” using a vast network of brokers and commission incentives on complex and incomprehensible loans- sold the loan, then, when it went bad, collected the PMI, took back the house via foreclosure, meanwhile- they got a huge, free bailout. Today they are in charge of the buying and selling end of most homes in SC and everywhere else in America. Well done bankers! It’s time to get Obama an “I heart banks” t-shirt and call it a day.

    Thumb up 10 Thumb down 1

  10. Where is the Justice says:

    How many of the banks are underwater right now? Who will bail them out? We tried that once and look what happened?

    The banks should not be forced to refinance people who can’t make a loan payment.

    Only the taxpayers and this country will suffer for this type of foolish thinking and nonsense.

    Most of us have lost hundreds of thousands of dollars because of the falling house market. But that is no reason for Obama and his brilliant economic theory to take the place of reality. Let the market do what it does best. Sort the problem out.

    Thumb up 11 Thumb down 8

  11. Jim says:

    Pearl…you are basically right, on both points.

    (1) He is the most economically inept President ever. Period. Example – he wastes almost $1 trillion on a “stimulus” that merely keeps union workers (police, teachers and firemen) employed for a year and then asks for another $400 billion a year later….for the EXACT same reason. Definition of insane is doing the same thing over and over and expecting a different result. He lies to the people that this “jobs” bill will do anything other than keep union workers employed through his re-election campaign.

    (2) He is a politician, thus he does think we’re all idiots. However, he is right on this one. The Sheeple voters ARE idiots. They all themselves to be conned into voting for the candidate with the correct letter next to their name. They allow themselves to be ‘grouped’ into “rich vs poor”, “Latino/African American vs white”, etc. Once grouped, the politicians con the ‘group’ into voting against the other party. The politicians don’t care about anything except getting re-elected. What do they have to say to get a group of people to vote against their opponent? That’s all that matters.

    Obama loves to point out that the “rich” have too much ‘wealth’ and thus their INCOME needs to be taxed more. Those who can think on their own know that ‘income’ is different than ‘wealth’. He loves to use the “rich don’t pay their fair share” line, as do ALL the Democrats (they just spout the party line). yet, what is the “fair share” of the “rich”? Who are the “rich”? Are the “rich” high earners or high net worth?? Remember, income is taxed, not wealth. If we run with the “1%” mantra, then the top 1% pay 37% of the taxes, whereas the bottom 47% pay NOTHING. Who isn’t paying “their fair share” in that statement?? How can a “fair share” be $0??

    You see, the politicians lie and manipulate the truth to get Sheeple to vote against their opponents. This way they don’t need ANY real thought, ANY real plan. It is just “I’m not him/her, he/she wants to give ‘rich’ people tax breaks”. The Sheeple are just too stupid to understand they are being manipulated.

    Thumb up 14 Thumb down 9

  12. Pearl Alquileres says:

    “We’re from the GOVERNMENT and we’re here to help”

    However…
    If you’re a homeowner whose mortgage isn’t owned or guaranteed by Frannie…
    you’re out of luck.

    If your mortgage was sold to Frannie after May 31, 2009…
    you’re out of luck.

    If you want to get out of negative-equity hell by doing a principal reduction…
    you’re out of luck.

    If your bank doesn’t feel like participating, for whatever reason….
    you’re out of luck.

    He is either the most economically inept President ever (and after Bush that’s saying something!) or he’s convinced that we’re all just a bunch of idiots.

    Thumb up 19 Thumb down 7

  13. FloAnn says:

    Money Grubber states, “[Obama] is doing nothing more than electioneering”.
    Any plan or law that Obama proposes to improve the lives of Americans is “electioneering”?

    Thumb up 18 Thumb down 10

  14. Money Grubber says:

    My scorn for the man has nothing to do with either political party nor conservatism vs. liberal.

    President Obama is working overtime in his zeal to seek a second term.

    He is doing nothing more than electioneering and we are paying him via a paycheck to do not much more than campaign.

    It should be a criminal offense, even at the state and local level, for ANY politician to campaign during working hours and while collecting a pay check from the public.

    Only the fools of our country are looking at President Obama and thinking that he is working on their behalf through this newest scheme of his. Its all an attempt to bribe the voter to allow him to keep his job. His ego rules him. He wants that job title more than anything else.

    Thumb up 19 Thumb down 11

  15. J.R. Wirth says:

    This is nothing more than turning underwater houses into roach motels for their occupants. This is what the large banks really want (and need given their balance sheets.) How compassionate is it to allow a homeowner to re-finance far in excess of 125% of fair value just to keep a loan from going bad?

    The best thing that can happen to these people is that they foreclose or short sell and rent something with their means while they repair their credit records. These people will never build sufficient equity with such terrible loans.

    I actually find this loan program to be cruelty under the guise of help, like giving out blankets with small pox on them.

    Thumb up 19 Thumb down 5

  16. Lets be Reasonable says:

    Thompson said, “I think everybody who has a mortgage today should be able to refinance at today’s rates.”
    .
    This is where I stand. I’m completely burned that my bank should be able to continue to charge above market rates for my mortgage. They are holding me hostage, knowing that no one else would give me a loan for my under water house. Banks should be REQUIRED to refinance existing loans in good standing at current interest rates. That would save me A LOT of money – think about the stimulus effect it would have on the economy.

    Thumb up 13 Thumb down 10

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