Obama Discusses Refinancing Initiative
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This is ALL THINGS CONSIDERED, from NPR News. I'm Michele Norris.
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And I'm Melissa Block. The White House is taking steps to make it easier for homeowners to refinance, even if they owe more than their homes are worth. President Obama discussed the changes today during a visit to Las Vegas. Home prices there have plunged more than 13 percent in the last year alone.
PRESIDENT BARACK OBAMA: There are still millions of Americans who have worked hard and acted responsibly, paying their mortgage payments on time. But now that their homes are worth less than they owe on their mortgage, they're having trouble getting refinancing even though mortgage rates are at record lows.
BLOCK: As NPR's Scott Horsley reports, the housing plan is one of several steps President Obama is taking on his own, in an effort to help the economy while his jobs plan is bottled up in Congress.
SCOTT HORSLEY, BYLINE: Some mortgage lenders are now advertising 30-year home loans for less than 4 percent, but millions of Americans don't qualify, in some cases because they owe more than their homes are worth. White House economic adviser Gene Sperling says these so-called underwater borrowers could save an average of $2,500 a year if they could refinance into cheaper loans.
GENE SPERLING: It's going to help more people stay in their home. But it's also going to make those who were going to stay in their home anyways have more cash for other necessities of life - which is good for those families, but it's also good for our economy as a whole.
HORSLEY: Earlier White House efforts to encourage underwater borrowers to refinance have been disappointing, either because the homeowners couldn't qualify, or the loans were too expensive, or because banks just didn't want the business. A program designed to help millions of families has so far helped only about 900,000. The changes announced today are designed to let borrowers refinance more cheaply, no matter how much their home prices have fallen. Mortgage analyst Bose George, of Keefe, Bruyette & Woods, says the government is also trying to entice more lenders into the re-fi business. By reducing the risk, those loans will come back to haunt them.
BOSE GEORGE: From the perspective of the borrower, you know, it hopefully, you know, meaningfully increases the odds that they will get a loan if they fall into the eligible category.
HORSLEY: The White House was careful not to predict how many homeowners might benefit, having fallen well short of earlier forecasts. Scott Simon, who manages mortgages for the PIMCO bond investment company, doesn't expect a huge wave of refinancing, but he says the change will help some families.
SCOTT SIMON: On the margin, if you are that person, it is incredibly important to you if it occurs. But from a systemic point of view, from a - economy-wide point of view, this is actually a rather small impact.
HORSLEY: The president continues to push his broader jobs plan, but with Senate Republicans repeatedly voting to block that, Mr. Obama is also looking for other ways to give the economy a lift.
OBAMA: We can't wait for an increasingly dysfunctional Congress to do its job. Where they won't act, I will.
HORSLEY: The administration has already acted to helped unemployed homeowners put off making mortgage payments for up to a year. And later this week, Mr. Obama will announce steps to help college students manage their student loans. These administrative gestures can provide a small boost for the economy. But White House adviser Sperling admits they are no substitute for the kind of bold action only Congress can take.
SPERLING: This administration - are doing everything it can on housing, but unless we get cooperation from Republicans in Congress as well, we will not be able to do the big things that will really help job creation, help our housing market, and at last put us on a path to see unemployment declining.
HORSLEY: The link between jobs and housing is especially clear in Nevada, which suffers from both the nation's highest unemployment rate, and the highest rate of foreclosure. Scott Horsley, NPR News.
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