House Speaker John Boehner is expressing skepticism about President Obama’s latest plan to lift the country’s housing market, suggesting government programs designed to help mortgage holders have long proven ineffective.
Responding to a plan President Barack Obama unveiled Wednesday to help homeowners refinance, Boehner scoffed at the idea and then suggested government should get out of the way of increasing foreclosures and falling prices, reports The Huff Post.
“One more time? We’ve done this. We’ve done this at least four times where there’s some new government program to help homeowners who have trouble with their mortgages,” Boehner told reporters on Capitol Hill Wednesday.
“None of these programs have worked and I don’t know why anyone would think that this next idea’s going to work and all they’ve done is delay the clearing of the market.”
The comments came shortly before the president unveiled a new proposal that the administration says would allow millions of homeowners to refinance their mortgages at a lower rate, saving the average family $3,000 a year.
Obama’s plan would require legislation from Congress to permit the Federal Housing Administration to help certain homeowners — specifically, those who are underwater but current in their payments and whose loans are not held by the FHA, Fannie Mae or Freddie Mac — to obtain new loans at better interest rates, saving $3,000 a year on average.
A similar plan already aids people whose mortgages are held by one of those government-backed entities, but other homeowners usually cannot get a bank to refinance their loans.
According to CNN, the cost of the president’s new proposal is expected to be between $5-$10 billion according to administration estimates.
It will be paid for by exacting a fee on the nation’s largest financial institutions – likely a nonstarter with Congressional Republicans who have rejected previous attempts to levy fees on the big banks.
While the administration’s loan modification effort so far have fallen far short of its goals — reaching fewer than 1 million homeowners when it aimed for 4 million with the last initiative — Shaun Donovan, secretary of housing and urban development, argued Wednesday that doing more is vital.
“Economists on all sides of the political spectrum have recognized that a broad-scale refinancing effort is one of the most important things that we can do, not only for families and for the housing market, but also for the economy more broadly,” Donovan said at a White House briefing.
“There’s no question, if you look at the fundamental economics in the housing market, by all standard measures we’ve reached a level of prices that is supported by the fundamental economics,” Donovan said.
“And so the great risk here for families, for neighborhoods, is that we let that spiral continue and continue to harm families and neighborhoods in a dramatic way,” he added.
Instead of a new government program, Boehner echoed the sentiment of other Republicans, including presidential frontrunner Mitt Romney, that it is more beneficial in the long run to allow the foreclosure process to run its course.
“The sooner the market clears and we understand where the prices really are will be the most important thing we can do in order to improve home values around the country,” Boehner said.
Although Boehner dismissed the plan, he insisted he would be willing to talk to the White House. “I am always open to working with the president of the United States. We both have a job to do. If it makes economic sense, if it’s fiscally responsible, certainly I’ll take a look at it,” he said.
Speaking at a community center in northern Virginia Wednesday morning, the president said: “It is wrong for anybody to suggest that the only option for struggling, responsible homeowners is to sit and wait for the housing market to hit bottom. I refuse to accept that, and so do the American people.”
“I’ll be honest – the programs that we put forward haven’t worked at the scale that we hoped,” Obama said. “Not as many people have taken advantage of it as we wanted.”
The proposal the president announced Wednesday also calls for a “Homeowners Bill of Rights,” which he said would add more transparency to the mortgage process. He also said his administration is looking into ways current foreclosed homes can be converted to rental properties.