By Mike Lillis - 02/01/12 10:40 PM EST
President Obama's new anti-foreclosure plan isn't nearly aggressive enough to stabilize the volatile housing market, a long list of California Democrats warned Wednesday.
The lawmakers say the proposal, which would make it easier for people to refinance their mortgage loans, is "encouraging" but falls far short of the relief needed to help the millions of struggling homeowners facing foreclosure.
"It’s no secret that Republican leaders have opposed housing proposals helping responsible homeowners," the Democrats said in a statement, "which is why we call upon [the Federal Housing Finance Agency] to embrace the principal paydown plan we have repeatedly offered for underwater homeowners facing the greatest risk of foreclosure."
The Democrats also expressed disappointment that Obama has so far resisted their calls to replace Edward DeMarco atop the FHFA, the independent agency that regulates Fannie Mae and Freddie Mac. With California reeling from the foreclosure crisis, they've argued that DeMarco has largely ignored the plight of struggling homeowners.
"Sadly, Acting Director DeMarco’s track record has proven his unwillingness to act in the best interest of homeowners and our economy, to the detriment of communities everywhere and our country’s recovery," the lawmakers said.
The statement was spearheaded by Democratic Rep. Zoe Lofgren and endorsed by 29 California Democrats.
Unveiled Wednesday, Obama's plan would empower all homeowners who are up-to-date on their mortgages to refinance at today's historically low interest rates. The change would be particularly advantageous for underwater homeowners, who are often denied refinancing because their outstanding mortgage balances exceed the value of their homes.
The White House proposal – which would be administered by the Federal Housing Agency – is estimated to cost between $5 billion and $10 billion, which Obama proposes to offset with a new fee on banks and other lenders.
Promoting his plan at a Northern Virginia community center Wednesday, Obama said government intervention is needed to help homeowners and stabilize the fragile housing market.
“It is wrong for anybody to suggest that the only option for struggling, responsible homeowners is to sit and wait for the housing market to hit bottom,” Obama said. “I refuse to accept that, and so do the American people."
The remarks were a clear attempt to distinguish Obama's housing approach to that of Mitt Romney, the former Massachusetts governor who now leads the field of GOP presidential hopefuls.
In October, Romney churned headlines when he said policymakers should step back and allow the housing market to "run its course and hit the bottom."
"The idea of the federal government running around and saying, 'Hey, we're going to give you some money for trading in your old car, or we're going to give you a few thousand bucks for buying a new house, or we're going to keep banks from foreclosing if you can't make your payments,' these kind of actions on the part of government haven't worked," Romney said during a debate in Nevada, which suffers the highest foreclosure rate nationwide.
Romney is hardly the only critic of Obama's plan to rescue struggling homeowners. Republican leaders have also rejected the notion that the government could – or should – prevent the housing market from reaching a natural nadir.
"The market will bottom out – you can't make the market artificially stay above its fair price," Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, said last week after Obama first floated his housing plan in his State of the Union speech.
"The inflation that created the euphoria that created the bubble was about finding creative ways to make things more affordable than they should be."
As the details of the plan emerged Wednesday, other Republican leaders wasted little time piling on with criticism.
"How many times have we done this?” House Speaker John Boehner (R-Ohio) asked during a press briefing Wednesday.
“We’ve done this at least four times, where there’s some new government program to help homeowners who have trouble with their mortgages.
"None of these programs have worked," Boehner added. "I don’t know why anyone would think this next idea is going to work.”
It was a rare instance when Boehner and House Democrats were on the same page.