Housing:

Obama’s jobs proposal might help Las Vegas homeowners

AP Photo/Susan Walsh

President Barack Obama, followed by Vice President Joe Biden, walks into the Rose Garden of the White House in Washington, Monday, Sept. 12, 2011, to speak about the American Jobs Act.

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  • Two proposals to help the housing market emerged from President Barack Obama’s job speech to Congress. But, only one may have an impact locally, analysts said.

    The proposals include a plan to convert repossessed homes into rentals. The second would allow homeowners with government-backed mortgages to refinance them at lower interest rates of about 4 percent.

    It’s the second proposal that caught the attention of local housing analysts because it would help lower payments and keep people in their homes, especially those who are considering strategic defaults.

    “There are a lot of people who would be helped by a lower payment,” said Dennis Smith, president of Home Builders Research. “They don’t want a bailout, but if they can refinance, that would make a difference with them.”

    Federal programs aimed at helping people refinance their homes have been geared for those current on their mortgage who are underwater as much as 25 percent, which may not help many who owe even greater amounts on their mortgage than their homes are worth. The Federal Housing Finance Agency is looking at increasing eligibility for those more than 25 percent underwater.

    “A lot’s going to depend on how low lenders and FHA goes for people far enough underwater,” said Ken Lobene, HUD’s field office director. “If it goes to 30 to 50 percent it would be very helpful.”

    Any major refinancing effort among Las Vegas homeowners would help set the bottom of the market and slow the rate of foreclosures and short sales that continue to bring down prices, said Steve Bottfeld, executive vice president of Marketing Solutions.

    “The name of the game here is to slow down the rate of foreclosures and what this proposal can do is help increase prices,” Bottfeld said.

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    1. They are spot on as far as how lenders respond to Upside Down property values, but if these values are not brought in close to current evaluations, then it will take a decade to clean up this mess. Making government rentals is just kicking the can down the road and giving us unimaginable neighborhoods. Not fair at all to the homeowner that is okay. I will say "thanks, but no thanks" to this option. What we need to do is allow people to sell and move on, or buy their own home at what value is accepted at a new purchase price. I would review each property and if it is a primary residence, this is what I would do. I, also would put in the contract that if the property is sold and any additional value is added, then a part goes to the original note holder...done all the time with housing incentives on State and Fed level.

    2. The thought is nice, but with HUDs recent up-ing of PMI requirements many people won't be able to realize any savings, even if their dropping by a percent or more. HUD would need to reverse the PMI requirement raise plus the government would need to allow the refi in order for owners to get the savings needed for more manageable payments. Of course, I'm sure no one mentioned that to the President. PMI is where HUD is making the money to save themselves on all the foreclosures they are currently dealing with. It's a vicious cycle, though...