Tuesday, October 25, 2011

What Will Obama's New Mortgage Program Do for Nevada?

He came back... And so did the Presidential Campaign.

But that's not all. He actually offered something new to the housing policy table yesterday.

While the White House tried to avoid predicting how many homeowners would benefit from the revamped refinancing program, the Federal Housing Finance Administration estimated an additional 1 million people would qualify. Moody's Analytics say the figure could be as high as 1.6 million.

Under Obama's proposal, homeowners who are still current on their mortgages would be able to refinance no matter how much their home value has dropped below what they still owe.

"Now, over the past two years, we've already taken some steps to help folks refinance their mortgages," Obama said, listing a series of measures. "But we can do more."

At the same time, Obama acknowledged that his latest proposal will not do all that's not needed to get the housing market back on its feet. "Given the magnitude of the housing bubble, and the huge inventory of unsold homes in places like Nevada, it will take time to solve these challenges," he said.

Is it a panacea? Not quite, since this is an executive order and not Congressional legislation that can assume broader authority. But for being such a limited program, it can still be of significant use here in Nevada.

Under the new program, homeowners who are current on their payments, have government-backed mortgages and who are up to 25 percent underwater will qualify for refinancing to a lower interest rate.

Although the program doesn’t address principal balances, it would make monthly payments more affordable, giving homeowners more money to spend, stimulating the economy.

The new program would also increase the ability of major banks to compete for the refinancing business, eliminate the need for an appraisal in many cases and reduce refinancing fees — all good things for Nevada homeowners, said Nasser Daneshvary, director of the Lied Institute for Real Estate Studies at UNLV.

“This is huge,” Daneshvary said. “If this is implemented, people really can find solutions now.”

While some economists are wondering about the overall stimulative effect of this housing policy overhaul, but so far it looks like this will be of help to a number of underwater homeowners in need. And it's definitely a step forward in that refinancing options will finally be available to homeowners who are seriously underwater, as is the case here in Nevada. And it's definitely different from what the Republicans have (not) been offering.

Take a look for yourself at Mitt Romney's housing plan.

Hmmm, I wonder which plan benefits Nevada more... "Don't try and stop the foreclosure process. Let it run its course and hit bottom."? Or real, concrete policy plans to start chipping away at the foreclosure crisis?


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