President Obama unveils the Homeowner Bill of Rights housing plan

Posted By azBlueMeanie:

President Obama on Wednesday proposed a "Homeowner Bill of Rights" that would fundamentally change the way houses are bought, sold and refinanced in an effort to stabilize the nation's ailing housing system. Obama unveils plan on housing:

One immediate goal of the so-called Homeowner Bill of Rights is to enable more borrowers to refinance, reduce their monthly payments or pay off their loans sooner, rebuilding equity lost in the housing crash.

The legislation announced Wednesday also would create a standardized system for mortgage applications and would expand bulk sales of government-owned foreclosure homes to investors, with the goal of decreasing the number of empty homes.

The bill would expand on a refinancing plan announced in October. That plan directed federal mortgage giants Fannie Mae and Freddie Mac to allow refinancing for mortgage-holders even if their homes are underwater by any amount. But the plan could not be offered to homeowners with mortgages privately held by banks. The new legislation would allow those homeowners to refinance as well, with the associated costs covered by a fee on major lenders.

Nearly 3.5 million U.S. homeowners with private mortgages, who owe more than their houses are now worth, could be eligible if the legislation passes.

Details of Obama's proposed legislation include:

Allowing eligible, underwater homeowners with private mortgages to refinance.

Banks would potentially pay to finance part of the program.

Standardizing the loan application and borrowing process.

This is a move to cut down on mortgage fraud and protect borrowers from being overcharged or placed in risky loans they don't understand. The federal government's new consumer-protection group would oversee this process.

Allowing Fannie and Freddie to sell foreclosure homes in bulk.

The sales would run through a new auction process instead of happening one at a time. This would draw more big investors to buy the houses and turn them into rentals. The goal is for fewer foreclosure homes to sit vacant for long periods of time. However, such bulk purchases could drive down an area's home prices.

Extending the Home Affordable Modification Program by one year.

The [previous] program encouraged lenders to modify loans, decreasing interest rates or extending the repayment terms to help struggling borrowers lower their payments. [The program will be] expanded to help more borrowers who didn't meet the income requirements before. But most importantly, Fannie and Freddie will be given more incentives to begin reducing the principal on loans they own through loan modifications.

More from the White House blog. President Obama Talks About Ways to Help Homeowners | The White House:

Today, in Falls Church, Virginia, President Obama expanded on the ideas he first presented in the State of the Union on ways to help responsible homeowners refinance their mortgages.

Here are more details about that plan.

But the President also said that we can't wait on Congress to take action to help working families in this country:

Already, we’ve set up a special task force I asked my Attorney General to establish to investigate the kind of activity banks took when they packaged and sold risky mortgages.  And that task force is ramping up its work as we speak. We’re going to keep at it and hold people who broke the law accountable and help restore confidence in the market.  We’re going to speed assistance to homeowners. And we’re going to turn the page on an era of recklessness that hurt so many hardworking Americans. 

Read the full remarks here. Or watch the video to learn more.