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Obama Housing Plans vs. Reality
Posted on Feb 15, 2012
By Cora Currier, ProPublica
The Obama administration recently unveiled a string of proposals to help struggling homeowners and get the housing market back on its feet 2014 part of the administration’s “We Can’t Wait” election year to-do list. Of course, the White House has made big promises before about helping homeowners, only to see them disappoint time and again.
Here are the latest proposals, whether they are anything new and whether they stand a chance of going anywhere.Refinancing
President Obama wants to allow homeowners whose mortgages are backed by private-sector companies to refinance at lower rates through the Federal Housing Administration. (The FHA insures many mortgages, and it is not the same as the FHFA, the regulatory agency in charge of Fannie Mae and Freddie Mac.) The president stressed that the proposal would help only “responsible” homeowners who were current on their payments 2014 to counter Republican complaints that his housing policies reward foolhardy borrowers.
Déjà vu: This is only the latest in a long series of attempts by Obama to help homeowners refinance. There have been a few, minor attempts to push refinancing through the FHA. Via a separate program launched in 2009 that used Freddie and Fannie, more than 900,000 homeowners have refinanced, substantially fewer than the goal of 4 million homeowners.
Will it happen? Unlikely. This plan needs to get through a Congress that is staunchly opposed. “How many times have we done this?” said House Speaker John Boehner, R-Ohio.
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A so-called “homeowner’s bill of rights” aims to make things clearer for borrowers, requiring a standard set of forms and disclosure of fees and conflicts of interests. It also calls for help for those very close to foreclosure, including a right of appeal on the decision to foreclose. (Homeowners have claimed wrongful foreclosure for a wide variety of reasons, and have had little recourse to appeal mortgage servicers’ decisions.)
Déjà vu: This may be just a branding of efforts already under way across different agencies. The new Consumer Financial Protection Bureau says it is already developing a set of standard disclosure forms and rules aimed at preventing misleading or fraudulent practices by mortgage servicers. As for an appeal process, Treasury already has a system for complaints about foreclosures, and is reportedly expanding its review process for those denied eligibility for government loan modification programs. Advocates have criticized Treasury’s current review efforts as ineffective. And, separately, federal bank regulators are developing new standards for mortgage servicers.
Will it happen? According the White House’s announcement, a host of agencies that deal with housing will work to enact new rules in keeping with the bill of rights. But right now the bill of rights itself is simply a set of guiding principles that don’t yet have any teeth. (We’ve documented problems with enforcement on similar guidelines.) The Department of Housing and Urban Development and the CFPB did not respond to our queries on exactly how the bill of rights relates to existing efforts.
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