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Mesa, Ariz., Realtors React To Housing Plan

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Mesa, Ariz., Realtors React To Housing Plan

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Mesa, Ariz., Realtors React To Housing Plan

Mesa, Ariz., Realtors React To Housing Plan

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  • <iframe src="https://www.npr.org/player/embed/100831132/100832290" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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President Barack Obama chose Mesa, Ariz., as the location to announce his plan to help homeowners stay in their homes. Now comes the hard part — making it work. Some real estate agents in the area offer their thoughts.

MICHELE NORRIS, Host:

President Obama unveiled his mortgage-relief plan in Arizona. And we now get reaction from someone who knows a thing or two about the housing market there. NPR's Ted Robbins paid a visit to a real estate agent who was very interested to hear what the president had to say.

TED ROBBINS: Tiffany Cloud and I are standing in front of her house in Mesa, Arizona, a few miles away from where the president spoke. The almond trees in her front yard are covered with pink and white blooms. It's a bright, sunny day, and she just put up a sign of the times, a for sale sign.

TIFFANY CLOUD: We've got a rather a large lot. And we want less work in less time. And you now, we're trying to live better within our means.

ROBBINS: Tiffany Cloud's family, a husband and three children, are not in financial trouble. But like lots of people, they're pulling back, not sure the housing crisis and the recession are going to end soon. She works at home. Her office is just inside the door.

(SOUNDBITE OF DOOR OPENING)

ROBBINS: Her livelihood may depend on President Obama's plan. So she listened to his speech very carefully.

CLOUD: I took a page of notes.

ROBBINS: One thing stuck out immediately.

CLOUD: First thing I wrote down was the 31 percent.

ROBBINS: That's the part that would help homeowners bring down their mortgage payments to as low as 31 percent of their income. She thinks that's a great idea. She has clients who are in foreclosure because their incomes have gone down, and their mortgage payments have gone up to well more than half their income. But Tiffany Cloud says the rest of the president's speech left her with more questions than answers.

CLOUD: The ideas and the intentions sound wonderful. I was really wanting to hear details - I think like a lot of people in our industry were.

ROBBINS: For instance, President Obama said he wanted to help homeowners who played by the rules.

CLOUD: We don't want to reward people hat didn't play by the rules. And I don't know how you would define that. And he also said he wanted to hold banks and lenders responsible. And I don't know how you do that, either.

ROBBINS: As John Ydstie reported earlier, the plan relies on financial incentive and an increased role for Fannie Mae and Freddie Mac. Cloud thinks that's fine. But she's waiting to see if the banks will respond, and she's doubtful. Right now, she says she has a half-dozen clients ready to buy homes that have been put into foreclosure, and nothing's happening.

CLOUD: And it's basically, Tiffany, find me the deal and make it happen. Well, making it happen is where we get stuck because we're going through so many layers of red tape. The banks have more red tape than the government.

ROBBINS: One of her buyers made an offer on a house at the beginning of January, and the bank is still sitting on it.

CLOUD: They still have not even assigned it to a negotiator to look at the file yet. And we're getting close to two months now on this file, and it's still sitting there. Meanwhile, our houses - our prices declined over 7 percent just in one month.

ROBBINS: Everyone agrees getting housing inventory off the market, or not letting it get on the market in the first place, is a key to stabilizing housing prices. Tiffany Cloud is not yet confident that's going to happen in a meaningful way this year, unless lenders respond quickly to the Obama plan.

Ted Robbins, NPR News. Mesa, Arizona.

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Obama Sets $75 Billion Plan To Stem Foreclosures

President Obama discusses his plan to deal with the home mortgage crisis Wednesday in a speech in Mesa, Ariz. Jim Watson/AFP/Getty Images hide caption

toggle caption Jim Watson/AFP/Getty Images

President Obama discusses his plan to deal with the home mortgage crisis Wednesday in a speech in Mesa, Ariz.

Jim Watson/AFP/Getty Images

In Depth

The Obama administration says its mortgage-assistance program could help up to 9 million families. But analysts say the plan has potential problems and won't necessarily help all homeowners.

Obama's Plan

Following are highlights of President Obama's plan to reduce mortgage foreclosures.

  • Allow an estimated 4 million to 5 million currently ineligible homeowners who get their mortgages through Fannie Mae or Freddie Mac to refinance at lower rates.
  • Create incentives for lenders to work with borrowers to modify the terms of subprime loans at risk of default and foreclosure.
  • Take "major steps" to keep mortgage rates low for millions of middle-class families seeking new mortgages.
  • Pursue reforms designed to help families avoid foreclosure, including allowing bankruptcy judges to reduce mortgages on primary residences to their fair market value.

Source: The White House

Graphic: Tracking Foreclosure Filings
Graphic: Tracking Foreclosure Filings

President Obama on Wednesday unveiled an aggressive plan that aims to help up to 9 million homeowners avoid foreclosure, a major cause of the nation's financial crisis.

The president announced details of the plan in a speech in suburban Phoenix, where massive foreclosures drove down the median price of an existing home to $136,000 last month — a 49 percent drop from 2006, according to The Arizona Republic.

The plan is designed to help homeowners whose mortgages exceed the value of their home and those who are on the verge of foreclosure. It includes $75 billion to cut the home payments of some homeowners and $200 billion from the Treasury Department to purchase preferred stock in Fannie Mae and Freddie Mac — double what was originally pledged.

"Through this plan, we will help between 7 and 9 million families restructure or refinance their mortgages so they can avoid foreclosure," Obama said in remarks to a crowd at a Mesa, Ariz., high school. "And we are not just helping homeowners at risk of falling over the edge; we are preventing their neighbors from being pulled over that edge too — as defaults and foreclosures contribute to sinking home values, failing local businesses, and lost jobs."

The announcement came shortly after the Commerce Department released even more bad news about the housing market. The government report showed that housing starts fell nearly 17 percent in January to a seasonally adjusted annual rate of 466,000 units, a record low. Applications for building permits, an indicator of future activity, also dropped.

The president's initiative calls for allowing 4 million to 5 million ineligible homeowners with mortgages through Fannie Mae or Freddie Mac to refinance their home loans at lower rates. To accomplish this, Obama said he would remove restrictions that prevent Fannie and Freddie from refinancing mortgages valued at more than 80 percent of a home's worth.

Housing Secretary Shaun Donovan stressed that homeowners don't need to be delinquent in payments to get help.

The plan also offers financial incentives for lenders to reduce the mortgage payments of as many as 4 million homeowners who are at risk of losing their homes. Under the $75 billion Homeowner Stability Initiative, lenders would cut mortgage payments to no more than 31 percent of the borrower's income.

"My plan establishes clear guidelines for the entire mortgage industry that will encourage lenders to modify mortgages on primary residences. Any institution that wishes to receive financial assistance from the government, and to modify home mortgages, will have to do so according to these guidelines — which will be in place two weeks from today," Obama said.

The plan is designed to aid homeowners and entire communities where double-digit foreclosure rates have led to declining properties and a shrinking tax base. Last year, there were nearly 3.2 million foreclosure filings — including default notices, auction sale notices and bank repossessions — on more than 2.3 million properties during 2008, an 81 percent increase in total properties from 2007, according to RealtyTrac, which tracks foreclosures.

The president stressed that the plan would not rescue speculators who made risky investments on homes to resell, dishonest lenders who distorted facts to get loans approved, or people who bought homes they knew they could not afford.

In addition, the Treasury Department announced it would provide up to $200 billion to Fannie Mae and Freddie Mac to stabilize the markets and hold down mortgage rates. In 2008, almost three-quarters of new home loans were financed or guaranteed by Fannie Mae and Freddie Mac.

"The increased funding will provide forward-looking confidence in the mortgage market and enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners," said a Treasury Department statement.

The president announced his housing initiative just one day after he signed a $787 billion economic stimulus plan that aims to create or save 3.5 million jobs. On Wednesday, he said part of the economic stimulus included $2 billion in competitive grants to communities looking for innovative ways to avoid foreclosures.

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