Obama bypasses Congress with mortgage plan

US President Barack Obama unveiled a stopgap plan Monday to ease the bite of the real estate crisis for cash-strapped homeowners while attacking Congress for blocking spending to create more jobs.
“These steps aren’t a substitute for the bold action we need to create jobs and grow the economy, but they will make a difference,” Obama said.
Thwarted by Republican opposition to his bigger jobs and stimulus package, Obama has shifted tactics by looking for action he can take without congressional approval to provide at least modest economic relief.
“We can’t wait for an increasingly dysfunctional Congress to do its job. Where they won’t act, I will,” Obama said.
Obama chose Las Vegas, the epicenter of the US real estate crash, to roll out measures to make it easier for people whose homes are now worth less than what they owe on them to refinance their mortgages at lower interest rates.
Nevada has the highest unemployment of any US state at 13.4 percent, and housing prices have plunged 17 percent since the market burst four years ago, igniting the financial meltdown that sent the US economy into a nosedive.
“Nationwide, more than 10 million homeowners are underwater. That means they owe more than those houses are worth. And here in Las Vegas, the city hit hardest of all, almost the entire housing market is under severe stress,” Obama said.
He acknowledged, however, that “the housing market won’t be fully healed until the unemployment rate comes down and the inventory of homes on the market comes down.”
“But that is no excuse for inaction. That is no excuse for just saying ‘no’ to Americans who need help right now. There is no excuse for the games and gridlock we’ve been seeing in Washington.”
Republicans in Congress last week blocked the president’s legislation aimed at boosting jobs, arguing that proposals that include tax hikes will hurt wealthy job creators and only add to the legions of unemployed Americans.
Obama will make stops later this week in California and Colorado, where he will highlight education and plans to announce measures to help borrowers to better manage student loan debt, his aides said.
The president is also hitting the campaign trail as the 2012 White House race heats up, attending an exclusive Los Angeles fundraising dinner late Monday along with actor Will Smith and basketball legend Magic Johnson.
Obama joked at one point that the mortgage refinancing measures would allow participants to “shop, go to Will’s movies” and patronize Johnson’s businesses, to the laughter of the guests, who had paid $35,800 to attend.
The combination of high unemployment and falling home prices has fed on itself since the housing market began to plunge, putting millions of homeowners in default and stalling any recovery in the market.
Moody’s predicts that foreclosures will rise next year to a record 1.5 million.
Part of Obama’s plan is to ease rules governing the Home Affordable Refinance Program (HARP), which allows mortgages backed by financing giants Fannie Mae and Freddie Mac to be refinanced at lower rates.
The HARP, launched in 2009, aimed to help millions of hopelessly cash-strapped homeowners, but in the end provided relief to fewer than a million borrowers.
Under current rules, people whose home values are more than 25 percent below what they owe are disqualified from refinancing at lower rates.
Obama said the rule changes will lift that restriction, reduce closing costs, eliminate certain refinancing fees and encourage greater competition for refinancing business among lenders.
Shaun Donovan, secretary of Housing and Urban Development, said refinancing could save homeowners $2,500 or more per year, “the equivalent of a substantial tax cut.”
“Any borrower, independent of how underwater they are, is eligible,” he said.