WASHINGTON (2/2/12)--Following up on statements made during his 2012 State of the Union address (News Now Jan. 25), President Barack Obama Wednesday released details of a new plan to help underwater homeowners and address ongoing difficulties in the housing market.
The president announced his "Plan to Help Responsible Homeowners and Heal the Housing Market" initiative saying it would "give every responsible homeowner in America the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates."
"No more red tape. No more runaround from the banks. And a small fee on the largest financial institutions will make sure it doesn't add to our deficit," he said.
Obama also unveiled a series of other steps the administration will take to boost the housing market by helping distressed mortgage holders. For instance, he announced that the U.S. Department of Agriculture (USDA) and the Federal Housing Administration (FHA) are working to implement a low-cost, streamlined refinancing program enabling borrowers to make better use of today's low mortgage rates.
Under this plan, FHA and UDSA borrowers must demonstrate they are current on their loans, but USDA is eliminating the need for a new appraisal, new credit report, and other documentation currently required in a refinancing.
FHA is removing loans from its "Compare Ratio," which is the process by which lenders' performance is reviewed. This would make it possible for lenders to refinance loans for eligible borrowers without compromising their status as FHA-approved lenders.
The administration's broad new plan to help underwater borrowers would require congressional action before it could be established. However, changes to existing rules, like the UDSA and FHA changes, could go ahead with action by the agencies involved.
Credit Union National Association General Counsel Eric Richard noted after the president's announcement that while the initiatives are not addressed specifically to credit unions, as active mortgage lenders and services, credit unions certainly would be affected by the programs.
Use the resource links below for more information on the administration's plans.