President Obama Explains Mortgage Reform

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Filed under: Market Comentary

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In Phoenix on Tuesday, President Barack Obama explained that the need for new efforts to support American homeowners, and he also suggested the closing of government-backed mortgage finance companies to limit the risk to “public money.”

Phoenix was one of the worst hit areas by the burst of the subprime housing bubble that created chaos on the world economy five years ago. Obama applauded the recovery in the housing market, especially in Phoenix, with home sales rising again and foreclosures definitely slowing down.

According to a recent article from Inquirer News, Obama said, “Millions of families have been able to come up for air. They’re no longer underwater on their mortgages.”

However, Obama stressed that even though the worst US economic crisis since the Great Depression has eased, the US still has more to do to ensure its citizens can buy homes. “We’ve got to turn the page on this kind of bubble-and-burst mentality that helped to create this mess in the first place. We’ve got to build a housing system that is durable and fair and rewards responsibility for generations to come.”

The president said that the US needs to “wind down” Fannie Mae and Freddie Mac, the mortgage finance giants that the government had supported for years and eventually bailed out in 2008 during the crisis. “For too long,” Obama said, “these companies were allowed to make huge profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag.”

Obama added, “It was ‘heads we win, tails, you lose.’ And it was wrong.”

The president also called for a continued guarantee of a fixed rate mortgage over 30 years, saying, “That’s something families should be able to rely on when they’re making the most important purchase of their lives.”

Obama also suggested for other actions from Congress to boost the housing market, including authorizing funds to repair rundown homes and tear down vacant properties.

The Republican Party also supports ending Fannie Mae and Freddie Mac, but has called for a greater market role in determining rates.

If you are currently in the market to purchase a home, it is still a great time to take advantage of low rates. Please give me a call and we can discuss all of your needs and concerns.

 

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