‘We can’t wait’ for a dysfunctional Congress to do its job

Posted by AzBlueMeanie:

Last week, Tea-Publicans in the U.S. Senate blocked a jobs bill that would have meant jobs for around 400,000 teachers and first responders. Twice.

This week, President Obama is back on the road with a new message, which he shared with a crowd in Las Vegas, Nevada – We Can't Wait:

So I'm here to say to all of you — and to say to the people of Nevada and the people of Las Vegas — we can’t wait for an increasingly dysfunctional Congress to do its job. Where they won't act, I will.

Instead of waiting for Congress to fix No Child Left Behind, the President directed his administration to move forward with a plan to give states the flexibility they need to help students meet higher standards. The Administration acted to cut dramatically the time it takes for small businesses who contract with the federal government to get paid. And last week, the President eliminated outdated regulations that will save hospitals and patients billions of dollars in the years ahead.

Now, President Obama is taking on housing.

In addition to a new set of rules announced this morning that has the potential to allow millions of homeowners to refinance their mortgages, President Obama discussed Project Rebuild:

A lot of homeowners in neighborhoods like this one have watched the values of their home decline not just because the housing bubble burst, but also because of the foreclosure sign next door, or the vacant home across the street. Right now, there are hundreds of thousands of vacant homes like these and more than a million unemployed construction workers. That doesn't make any sense when there’s work to be done and there are workers ready to do it.

So Project Rebuild connects the two by helping the private sector put construction workers to work rehabilitating vacant or abandoned homes and businesses all across the country. That will help stabilize home prices in communities like this one.

Project Rebuild is a step that Congress can take right away. The time for inaction has passed.

The Arizona Republic reports today Arizona underwater homeowners to get refinance help:

The plan announced Monday would lift the value requirement completely, allowing some borrowers to refinance no matter how much their home's value has dropped, if their mortgage is backed by one of the two largest federal mortgage agencies and they meet other requirements.

Borrowers can start to apply as soon as December, according to the few details released Monday, and the program would run through the end of 2013.

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The plan

The HARP program has helped about 900,000 homeowners nationally to refinance. Arizona figures aren't available.

The plan described by Obama and the Federal Housing Finance Agency on Monday would expand HARP by changing the rules and costs associated and extending the time period in which borrowers can apply.

Among the key elements:

- Refinancing will be available to homeowners with loans backed by Fannie Mae or Freddie Mac in 2009 or earlier.

As with the current refinancing program, the option would be open only to borrowers with mortgages backed by the two largest federal mortgage agencies. Borrowers whose banks hold their loans privately would not qualify. Still, federally backed loans make up a majority of the existing mortgages in the state and the country.

The federal government did not give an official count of how many people will be able to refinance, but U.S. Housing and Urban Development head Shaun Donovan estimated 4 million families could be eligible.

Current federal programs have encouraged lenders to refinance such loans or modify loan-payment amounts for borrowers in financial trouble, but the banks that handle the payments in many cases have been slow to respond. Obama said the new program will allow other lenders to compete to make the new loans.

"Some lenders, frankly, just refuse to refinance," he said Monday. "So, these changes are going to encourage other lenders to compete for that business by offering better terms and rates, and eligible homeowners are going to be able to shop around."

The program is designed to help borrowers who took loans before the housing crash, and only applies to loans backed by the federal agencies on or before May 31, 2009.

Market-watchers say the key will be to see whether banks and the mortgage giants actually follow through.

"The new refinancing program sounds like a good idea, but it has to have teeth," said John Smith, president of the Mesa-based non-profit Housing Our Communities, which counsels homeowners on avoiding foreclosure. "The government has to make Fannie and Freddie go through with these deals."

- Refinancing will be available to homeowners who are current on their mortgage payments.

To qualify, homeowners must not have missed more than one payment in the past year.

The plan differs from other programs that were meant to help borrowers who could no longer afford their mortgages. The federal loan-modification program was open only to borrowers who were already late on making their payments.

Instead, the refinancing is open to borrowers who have made their payments.

Although it could help some people who have struggled to make those payments avoid foreclosure, it also could simply help other homeowners free up more money each month.

- Refinancing will be available no matter how much the home is currently worth.

The loan simply must be backed by Fannie or Freddie and be within standard sizes – for example, oversize "jumbo" loans will not qualify.

Borrowers who meet the financial requirements could refinance no matter how much the amount of the loan exceeds the home's current value, known as the loan-to-value ratio.

The previous HARP plan called for a 105 percent loan-to-value ratio, meaning homeowners who owed 5 percent more than their houses were worth could refinance under the plan. That ratio was quickly criticized for helping few in the hardest-hit housing markets of Arizona, California, Nevada, Florida and Michigan. It was raised to 125 percent but still wasn't enough for many homeowners who bought during the past decade in metro Phoenix.

"If the limit is lifted completely, then that will make a big difference for Arizona," said housing analyst Michael Orr, who publishes an online daily analysis of metro Phoenix's housing market called the "Cromford Report." "Many people have a loan-to-value of over 200 percent."

- Refinancing will cost less.

The changes announced Monday would also limit fees associated with refinancing, in hopes of making the move more affordable. Homeowners who qualify don't have to pay additional excessive fees for an appraisal or processing.

Jay Luber, president of Phoenix-based Galaxy Lending, knows many homeowners who will qualify for this program.

He believes it could "accelerate the stabilization of values in metro Phoenix by decreasing foreclosures and short sales."

It's a start. And that is more than the "Less Than Do Nothing" Tea-Publican Congress has been willing to do.