Obama Urges Access to 30-Year Fixed-Rate Mortgage
Obama Urges Access to 30-Year Fixed-Rate Mortgage
President Barack Obama placed home ownership and the 30-year fixed-rate mortgage at the center of his housing-focused economic speech yesterday in Phoenix. The speech is the second in a series of addresses the president is making around the country to showcase his proposals, new and old, for keeping the recovery going by shoring up the middle class, which has been struggling since the downturn.
“I’m laying out my ideas for how we must build on the cornerstones of what it means to be middle class in America,” Obama said at the opening of his remarks yesterday afternoon, at Desert Vista High School. “I’ve come to Phoenix to talk about that second, most tangible cornerstone at the heart of middle-class life: the chance to own your own home.”
Obama said he wants to ensure the continued availability of 30-year fixed-rate mortgage financing and replace the two secondary mortgage market companies, Fannie Mae and Freddie Mac, with a system that's built around private mortgage insurance but stabilized by a limited government role. “We should preserve access to safe and simple mortgage products like the 30-year fixed-rate mortgage,” he said. “That’s something families should be able to rely on when they make the most important purchase of their lives. ... The good news is, there’s a bipartisan group of senators working” on this in a way that ends Fannie Mae and Freddie Mac without risking affordable, long-term financing. ... I support these kinds of efforts.”
Among the legislation in the Senate is the “Housing Finance Reform and American Protection Act,” S. 1217, introduced in June by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va. NAR is working with lawmakers to improve the legislation, but in general it takes an approach NAR supports because it helps ensure the continued availability of the 30-year fixed-rate mortgage while maintaining an explicit government guarantee that comes in after private insurers have met their responsibility. More discussion of this is on REALTOR® Magazine's "Speaking of Real Estate" blog.
NAR President Gary Thomas, in a statement released after the speech, said the president is laying out proposals that closely track NAR priorities. “NAR believes these principles will contribute to the long-term stability of our nation’s housing market and provide consumers with access to affordable mortgage credit, even during economic downturns,” Thomas said. He added that REALTORS® want to work with Congress and the administration on the design of the new secondary mortgage model. “NAR believes that [the] recent bipartisan Senate effort, lauded today by the president, incorporates a promising groundwork for reform.”
Obama also provided assurances that he wants to shore up the FHA without changing its historic mission, although he also favors allowing FHA loan limits to decrease. “We need to strengthen the FHA so it gives today’s families the same kind of chance it gave my grandparents,” he said, “and preserves that rung on the ladder of opportunity.”
As he has in previous addresses, Obama called on Congress to enact legislation that would expand the administration’s program for helping underwater home owners refinance their mortgage into an FHA loan. We should “allow every home owner to save thousands of dollars a year by refinancing their mortgage at today’s rates,” he said. “Let’s get that done.” A fact sheet the administration provided ahead of his remarks estimates that households eligible for the program, including those whose mortgage isn’t backed by the federal government and thus is not currently eligible for the program, would save an average of $3,000 a year in mortgage costs.
Help to the multifamily sector should be part of the mix, too. “We need to support affordable rental housing and keep up our fight against homelessness,” the President said.
Although he didn’t elaborate, his administration’s fact sheet calls for continued support of the Low-Income Housing Tax Credit and other rental housing development incentives, reducing local barriers to rental housing development, and continuing a program for preserving existing affordable rental units called the Rental Assistance Demonstration.
The president also said he’d like to see Rep. Mel Watt, D-N.C., confirmed as his choice to head up the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, and he called for swift passage of the Senate immigration reform bill, which ties into housing because of the strong track record of home ownership among immigrants. “It’s pretty simple,” Obama said, “when more people buy homes, and play by the rules, home values go up for everybody. According to one recent study, the average home owner has already seen the value of their home boosted by thousands of dollars, just because of immigration."
Attending the speech were the leaders and executive staff of the Phoenix and Arizona associations of REALTORS®. “REALTORS® are looking forward to support the continuation of safe 30-year fixed-rate mortgage financing in any way we can,” Diane Scherer, CEO of the Phoenix Association of REALTORS®, said yesterday before the speech.
Scherer and the others tweeted their observations throughout the speech. Access the tweets from “phxrealtors” and “dscherer” via Twitter by searching for the hashtag “#obamaphx.”
— Robert Freedman, REALTOR® Magazine