Falls Church, Va. Conceding his earlier housing programs have fallen short, President Barack Obama on Wednesday proposed a vast expansion of government assistance to homeowners, aiming to make lower lending rates a possibility for millions of borrowers who have not been able to get out from under burdensome mortgages.
The president’s proposal is laden with election-year politics and faces a difficult path in Congress. Obama wants to pay for the estimated $5 billion to $10 billion cost with a fee on the nation’s largest banks, a proposal that has failed to win support even when Democrats controlled both the House and Senate.
In addition, its potential impact could be limited by the fact that it would not apply to borrowers who are behind on their home loan payments, those most threatened by foreclosure.
The housing issue, while national in scope, particularly resonates in election battlegrounds such as Nevada and Florida that have faced record foreclosures. Obama himself drew attention to the politics surrounding the issue with a jab at former Massachusetts Gov. Mitt Romney, now the front-runner in the Republican presidential contest. Romney in October suggested the foreclosure process should be allowed to “run its course and hit the bottom.”
Without naming Romney, Obama said: “It is wrong for anyone 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.”
Obama is asking Congress to pass legislation that would make it easier for more borrowers to refinance their loans, creating a new program through the Federal Housing Administration that would have the government assume the risk for the new mortgages.
Obama cast the effort as not only a needed step to spur the economy but as a necessary boost to America’s sense of identity.