Obama pushes Congress on mortgage relief

President Obama on Monday called on Congress to act on home mortgage relief when it returns for a brief legislative session in September.

The housing market is widely believed to be the most significant drag on the economy, and Obama was under fire in a New York Times front-page story on Monday for the inability of his administration to address the burden of homeowner debt.

Obama sought to shift responsibility to Congress during a midday news conference.

“We are going to be pushing Congress to see if it can pass a refinancing bill that puts $3,000 in the pocket of the average family that hasn’t yet refinanced their mortgage,” he said. 

“That’s a big deal. That $3,000 can be used to strengthen the equity in the person’s home; that would raise the value of the person’s home. Alternatively, that’s $3,000 in a family’s pocket that they can spend on a new computer for their kid going back to school or new school clothes for their kids,” he added.

Obama said that “interest rates are low, and the housing market is beginning to tick back up, but it is not at all where it needs to be.”

White House spokeswoman Amy Brundage said that the White House is supporting a trio of Senate Democratic bills that streamline refinancing.

Sens. Robert Menendez (D-N.J.) and Barbara Boxer (D-Calif.) in May introduced the Responsible Homeowners Refinancing Act of 2012. That would streamline refinancing for Fannie Mae and Freddie Mac borrowers by eliminating upfront fees and appraisal costs, among other changes.

Sen. Jeff Merkley (D-Ore.) has a bill called the Rebuilding Equity Act for loans of 20 years or less. It would require Fannie Mae or Freddie Mac to pay all closing costs.

Sen. Dianne Feinstein (D-Calif.) has a bill to aid underwater homeowners by allowing them to receive Federal Housing Administration mortgage insurance.

While significant, the White House-backed legislation falls short of the extensive housing action urged by some. Liberal groups and unions want Obama to replace Edward DeMarco — acting director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac — to force the agency to approve principal mortgage reductions. Others want legislation to allow bankruptcy judges to approve principal reductions.

Politically, such extensive action could risk angering homeowners who have not fallen behind on mortgage payments.

Obama listed the refinancing bills when asked what can be done to help the flagging economy in the coming months before the election. In addition, Obama called on Congress to pass a continuing resolution to fund the government after the fiscal year ends on Oct. 1, to extend Bush era tax rates for the middle class, and to come together on a deficit grand bargain.

House Republicans and Senate Democrats announced a deal in late July on a 2013 spending bill that would extend government funding at roughly current levels without modifications for six months.

Any deficit grand bargain or movement on Bush era tax rates are generally considered unlikely until voters deliver their verdicts on the budget plans of Obama and the GOP presidential ticket of Mitt Romney and House Budget Committee Chairman Paul Ryan (R-Wis.).

---