President Obama yesterday unveiled an ambitious plan to revitalize the country’s struggling real estate market, which he claimed would help millions of homeowners to refinance their mortgage and benefit from the current low interest rates.
Over 10 million American homeowners are now underwater on their mortgages (owing more money than their homes are worth) following the steep decline in prices over the last few years, emphasized Obama when announcing his refinancing plan.
According to the President:
“The housing crisis struck right at the heart of what it means to be middle class in America: our homes.”
Numerous households have had to seek help from various public programs in recent years (such as the HAMP program) to avoid their homes being foreclosed on, but many of these government initiatives have struggled under the enormous scope of the housing crisis.
Presenting his new plan at a Falls Church, Virginia, community center, Obama said that he hoped more than a third of third of the 10 million families whose homes were underwater would be able to benefit, although this theory has already been called into question by several analysts.
Obama's refinancing plan will allow for “responsible” homeowners who are up-to-date with their mortgage repayments to be able to refinance their homes at today’s lower interest rates, affording them potential savings of around $3,000 per annum, said the President.
As well as refinancing, Obama’s housing plan will also provide more protection for homeowners against inappropriate evictions. Further, the plan called for more foreclosed homes to be sold to private investors so that they can be rented out.
The plan, which is yet to be approved by Congress, is expected to cost the government between $5 billion and $10 billion.