President Barack Obama was in Las Vegas today where he gave a speech from one of the many distressed neighborhoods in Las Vegas valley, to announce new rules on federal mortgages to prevent more families from losing their homes to foreclosure.
In his speech today, Obama talked about the American Jobs Act, and a new program contained in the Act to help people with their mortgages, the program is called “Project Rebuild”.
President Obama on “Project Rebirth”:
A lot of homeowners in neighborhoods like this one have watched the values of their home decline not just because the housing bubble burst, but also because of the foreclosure sign next door, or the vacant home across the street. Right now, there are hundreds of thousands of vacant homes like these and more than a million unemployed construction workers. That doesn’t make any sense when there’s work to be done and there are workers ready to do it.
So Project Rebuild connects the two by helping the private sector put construction workers to work rehabilitating vacant or abandoned homes and businesses all across the country. That will help stabilize home prices in communities like this one. And it will help families like the Bonillas to buy a new home and build a nest egg.
This is something that Congress can pass right now, because it’s in the jobs bill. We will put construction workers back to work and we will rebuild homes all across Nevada and all across the country.
Since the Republicans in Congress have voted against the American Jobs Act, this program is unlikely to happen, and President Obama knows that. And here is what he plans on doing, because “we can’t wait”.
So that’s going to soon change. Last month, directed the Federal Housing Finance Agency (FHFA) to explore options to help many American homeowners to refinance. And here is what Obama said he was going to do.
And today, I am pleased to announce that the agency that is in charge is going to be taking a series of steps to help responsible homeowners refinance and take advantage of low mortgage rates. So let me just name those steps.
Number one, the barrier will be lifted that prohibits responsible homeowners from refinancing if their home values have fallen so low that what they owe on their mortgage is 25 percent higher than the current value of their home. And this is critically important for a place like Las Vegas, where home values have fallen by more than 50 percent over the past five years.
So let me just give you an example. If you’ve got a $250,000 mortgage at 6 percent interest rates, but the value of your home has fallen below $200,000, right now you can’t refinance. You’re ineligible. But that’s going to change. If you meet certain requirements, you will have the chance to refinance at lower rates, which could save you hundreds of dollars a month, and thousands of dollars a year on mortgage payments.
Second, there are going to be lower closing costs, and certain refinancing fees will be eliminated — fees that can sometimes cancel out the benefits of refinancing altogether, so people don’t bother to refinance because they’ve got all these fees that they have to pay. Well, we’re going to try to knock away some of those fees.
Third, there’s going to be more competition so that consumers can shop around for the best rates. Right now, some underwater homeowners have no choice but to refinance with their original lender — and some lenders, frankly, just refuse to refinance. So these changes are going to encourage other lenders to compete for that business by offering better terms and rates, and eligible homeowners are going to be able to shop around for the best rates and the best terms.
So you take these things together, this is going to help a lot more homeowners refinance at lower rates, which means consumers save money, those families save money, it gets those families spending again. And it also makes it easier for them to make their mortgage payments, so that they don’t lose their home and bring down home values in the neighborhood.
President Obama goes onto say that its going to be a long road for Nevada because of so many vacant homes and unemployment, and the sooner republicans stop playing politics, the sooner our economy will recover.
You can read his entire speech and plan by clicking here.
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