In a lead-in to President Barack Obama’s appearance in Southern Nevada, Housing and Urban Development Secretary Shaun Donovan visited Las Vegas on Wednesday to promote the president’s latest initiative to ease the housing crisis.
Donovan offered no fresh details about the proposal, unveiled Tuesday by Obama during his State of the Union speech, but told a crowd of about three dozen community leaders and local residents that it would provide substantial relief to Nevadans and other Americans trapped underwater in their homes. A key component of the plan is to extend the 2009 Home Affordable Refinance Program, which allows homeowners who are current on their mortgages to refinance even if the value of their homes has dropped below what they still owe.
“We’ve made progress, but to keep making progress we have to do more,” Donovan said.
The current refinancing program applies only to loans approved by Fannie Mae and Freddie Mac, but Obama’s new proposal would make the program available to an estimated 2 million to 3 million homeowners with mortgages not guaranteed by the government-controlled lending giants. Reportedly, the refinances would be funded by fees on major banks.
The plan also calls for an investigation into mortgage and foreclosure practices of banks.
“I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates,” Obama said Tuesday night. “No more red tape. No more runaround from the banks.”
Donovan spoke a few hours before Obama was scheduled to land at McCarran International Airport as part of a three-day, five-state tour to rally support for the themes of his State of the Union speech. Donovan declined to offer specifics about the housing plan, saying Obama would do so in coming weeks.
“I don’t want to scoop my boss,” he said.
But local leaders on hand said the plan, even without details, offered hope of curbing Las Vegas’ epidemic housing problem. A report this month by RealtyTrac, which tracks foreclosures nationwide, showed that Nevada ranked No. 1 in 2011 among states hit hardest by home foreclosures — the fifth straight year the state has held the dubious top spot.
“I trust you. I believe you. I’m going to hold you accountable for what you’re saying,” North Las Vegas Mayor Shari Buck told Donovan. “I’m going to hold the president and Congress accountable.”
Donovan made his remarks at the Consumer Credit Counseling Service, 2650 S. Jones Blvd., where nearly 90,000 Las Vegas Valley residents have turned for help with debt over the past five years. Las Vegas Mayor Carolyn Goodman and Henderson Mayor Andy Hafen were among those in the crowd, with both calling on Congress to give bipartisan support to Obama’s housing plan.
Not everyone is so supportive, however. In a story posted on its website Tuesday night, the Los Angeles Times quoted Jed Kolko, chief economist and head of analytics at real estate website Trulia.com, as saying the government could help the housing market more directly by increasing loan modifications or turning foreclosures into rentals.
“This is primarily economic stimulus,” Kolko said in the Times’ story. “It puts money in the pockets of people with mortgages. It won’t impact the housing market much. Underwater borrowers will remain underwater, and you need to be current on your payments to refinance.”
Asked to respond to criticism that a $3,000 reduction in mortgage payments for some homeowners wasn’t a meaningful solution to the nation’s housing problem, Donovan said the plan would keep untold numbers of Americans from losing their homes.
“When a family is really on the edge of making it, that $3,000 a year can be a real lifeline,” he said.
Donovan added that the refinancing component was only one part of the overall plan.