Obama's Presidential Plans for the Housing Industry
Wednesday, November 05, 2008
Democratic candidate Barack Obama was elected by the American people to serve as the nation's 44th President in a historic election of deep-rooted significance last night. What does this new face in the White House mean for our industry and what are his plans for the depressed housing market?
Already at work, the President-elect is proposing a new overarching economic stimulus package that experts are estimating could cost $190 billion. As part of this plan, Obama says he will implement a 90-day foreclosure moratorium for homeowners making “good faith efforts” to pay their mortgage debt. In addition, he intends to reform the federal bankruptcy code to directly assist homeowners by removing legal impediments to allow court-assisted mortgage restructuring, a measure that several consumer advocacy groups fought hard to include in the government's most recent financial rescue package.
In September, Obama told the National Association of Realtors (NAR) that he will propose the creation of a $10 billion foreclosure prevention fund that “works in tandem with state, local, and community nonprofit efforts to help households facing foreclosure renegotiate with lenders or put their homes on the market.” He also suggested the government expand the mortgage revenue bond program to give state housing agencies $10 billion in new resources to help struggling homeowners.
In addition, Obama said in the NAR interview, he will push forward with the Stop Fraud Act that he introduced two years ago, which would create criminal penalties for mortgage professionals found guilty of fraud and increase funding for federal and state enforcement of anti-fraud programs.
“I also want to see a simplified, standardized metric for calculating the costs of a home mortgage, similar to the annual percentage rate used by banks to identify the effective interest rate a borrower ends up paying on a loan,” Obama told NAR.
To help make homeownership more affordable, Obama says he will provide a universal 10 percent refundable tax credit for mortgage interest. He also is proposing a bipartisan homeownership tax credit that would allow developers to bridge the gap between the cost of building a house and a sale price that’s affordable to low- and moderate-income households.
Obama says he will also call on the secretaries of the Department of Housing and Urban Development (HUD) and the U.S. Treasury to use their existing authority to more aggressively modify the terms of mortgages. Obama will soon be tasked with appointing a new national financial leader to the position of Treasury Secretary, because as DSNews.com reported earlier this summer, Secretary Henry M. Paulson, Jr. has already said he will be stepping down from the post in January.
Another monumental undertaking ahead of the new President is steering the restructuring of mortgage finance giants Fannie Mae and Freddie Mac, who are currently under the conservatorship of the U.S. government. Obama has been particularly vocal in his criticism of the institutions' former management, making it clear that a return to the status quo is “unacceptable.” Obama's view is of a lasting federal role for the two government-sponsored enterprises (GSEs). “Any action we take must be focused not on the whims of lomabbyists and special interests worried about their bonuses and hourly fees, but on whether it will strengthen our economy and help struggling homeowners,” Obama told reporters on the campaign trail in September.
In general, the election of a new U.S. President with a change agenda means that the troubled economy – and in turn, its causal agent, the ailing housing market – will undoubtedly become policymakers' top priority.
Already at work, the President-elect is proposing a new overarching economic stimulus package that experts are estimating could cost $190 billion. As part of this plan, Obama says he will implement a 90-day foreclosure moratorium for homeowners making “good faith efforts” to pay their mortgage debt. In addition, he intends to reform the federal bankruptcy code to directly assist homeowners by removing legal impediments to allow court-assisted mortgage restructuring, a measure that several consumer advocacy groups fought hard to include in the government's most recent financial rescue package.
In September, Obama told the National Association of Realtors (NAR) that he will propose the creation of a $10 billion foreclosure prevention fund that “works in tandem with state, local, and community nonprofit efforts to help households facing foreclosure renegotiate with lenders or put their homes on the market.” He also suggested the government expand the mortgage revenue bond program to give state housing agencies $10 billion in new resources to help struggling homeowners.
In addition, Obama said in the NAR interview, he will push forward with the Stop Fraud Act that he introduced two years ago, which would create criminal penalties for mortgage professionals found guilty of fraud and increase funding for federal and state enforcement of anti-fraud programs.
“I also want to see a simplified, standardized metric for calculating the costs of a home mortgage, similar to the annual percentage rate used by banks to identify the effective interest rate a borrower ends up paying on a loan,” Obama told NAR.
To help make homeownership more affordable, Obama says he will provide a universal 10 percent refundable tax credit for mortgage interest. He also is proposing a bipartisan homeownership tax credit that would allow developers to bridge the gap between the cost of building a house and a sale price that’s affordable to low- and moderate-income households.
Obama says he will also call on the secretaries of the Department of Housing and Urban Development (HUD) and the U.S. Treasury to use their existing authority to more aggressively modify the terms of mortgages. Obama will soon be tasked with appointing a new national financial leader to the position of Treasury Secretary, because as DSNews.com reported earlier this summer, Secretary Henry M. Paulson, Jr. has already said he will be stepping down from the post in January.
Another monumental undertaking ahead of the new President is steering the restructuring of mortgage finance giants Fannie Mae and Freddie Mac, who are currently under the conservatorship of the U.S. government. Obama has been particularly vocal in his criticism of the institutions' former management, making it clear that a return to the status quo is “unacceptable.” Obama's view is of a lasting federal role for the two government-sponsored enterprises (GSEs). “Any action we take must be focused not on the whims of lomabbyists and special interests worried about their bonuses and hourly fees, but on whether it will strengthen our economy and help struggling homeowners,” Obama told reporters on the campaign trail in September.
In general, the election of a new U.S. President with a change agenda means that the troubled economy – and in turn, its causal agent, the ailing housing market – will undoubtedly become policymakers' top priority.
