FACT SHEET: A Better Bargain for the Middle Class: Housing [View all]

[ProSense]

Freddie and Fannie were privatized from 1968 to 1970. They were private organizations that were bailed out in 2008.

http://realestate.aol.com/blog/2010/12/24/the-rise-and-fall-of-fannie-mae-a-timeline/

President Obama is proposing ending the private entities, ending bailouts, and have a public agency provide government-insured mortgages.

FACT SHEET: A Better Bargain for the Middle Class: Housing

When President Obama took office, our housing market was in free-fall, leaving many families feeling trapped and anxious about their mortgages. The President took immediate action to stabilize our housing market and protect the middle class. These steps helped millions of middle class families stay in their homes, save money on their mortgages, and turn their communities around.

Working together we need to build a more durable and fair system that promotes the American Dream of homeownership, while preventing the nightmare of another crisis. Today, our housing market is coming back. Home values are rising, foreclosures are at the lowest levels since 2006, home sales have increased at double digit rates, and American families are on pace to purchase over 5 million homes this year. In part because of President Obama's tough regulations that cracked down on the most reckless practices from the housing crisis, responsible Americans can feel more confident and secure when they borrow money to purchase their own home. But the job is not done, and restoring security to homeownership is one of the President’s top economic priorities.

In today’s speech, the President laid out his ideas to help more responsible homeowners refinance, to cut red tape, to increase home values by fixing our broken immigration system, to help the hardest hit communities rebuild, and to ensure those who rent have decent and affordable options. The President also made it clear that going back to the same bubble-and-bust housing system that caused the financial crisis is not acceptable. We need a rock-solid foundation for financing homeownership with a bigger role for the private sector, where taxpayers aren’t on the hook for the irresponsible behavior or bad decisions of financial institutions and we finally put an end to an era where Fannie Mae and Freddie Mac could expect a bailout for risky behavior in pursuit of profits. These bipartisan solutions will help build on the progress we’ve made over the last four years, and together we can make owning a home a symbol of responsibility and a source of security for generations to come.

A Better Bargain for the Middle Class: Housing

A Better Bargain for Responsible, Middle Class Homeowners:

• Help responsible families save $3,000 a year by refinancing while mortgage rates are still low
  
  
• Take executive action to cut red tape so responsible families can get a mortgage
  
  
• Fix our broken immigration system to increase home values
  
  
• Rebuild communities hit hardest by foreclosure
  
  
• Create and preserve affordable rental housing by passing a bipartisan Senate proposal

Core Principles for Durable, Fair Housing Finance (GSE) Reform:

• Put private capital at the center of the housing finance system
  
  
• End Fannie Mae and Freddie Mac’s failed business model so taxpayers are never again on the hook for bad loans and bailouts
  
  
• Ensure widespread access to safe, responsible financing like the 30-year fixed rate mortgage
  
  
• Support affordability and access for renters and homeownership for first-time buyers, in part by continuing the historic affordability role of Federal Housing Administration (FHA)

Making Families’ Most Important Financial Decision Safe and Simple:

• Ensure all prospective homeowners receive a single, simple three-page mortgage disclosure form
  
  
• Increase incentives for lenders to deliver high quality loans and products
  
  
• Level the playing field for financial institutions of all sizes so borrowers can work with the lender right for them

Confirming Mel Watt Will Provide Certainty and Leadership During This Key Phase:

• Congress should swiftly confirm the President’s FHFA Director nominee Mel Watt to further accelerate efforts toward common sense housing finance reform

A Better Bargain for Responsible, Middle Class Homeowners

There are several additional steps – including legislative proposals – that could immediately work to further strengthen the housing market and ensure that the middle class can secure affordable mortgages, refinance their loans at today’s low rates, and build housing wealth while ensuring that no communities or homeowners are left behind by the housing recovery.

• Help Responsible Families Save $3,000 a Year by Refinancing While Mortgage Rates are Still Low: President Obama has set the goal of eliminating all barriers to refinancing for responsible borrowers. The Administration worked with housing regulators to implement key changes to the government’s refinancing program (HARP) that nearly tripled the number of families who received refinancings from 400,000 in 2011 to 1.1 million in 2012, bringing the HARP program total to more than 2.6 million. To complete the task of providing refinancing options for all responsible borrowers, the President has proposed the following three steps:
  
  
  • Streamline refinancing for borrowers with government-insured mortgages.
    
    
  • Waive closing costs for borrowers who refinance into shorter term loans to more rapidly rebuild equity in their homes.
    
    
  • Expand eligibility for refinancing to many hundreds of thousands of eligible borrowers who do not have government-backed mortgages by creating special programs through the Federal Housing Administration (FHA) or Fannie Mae and Freddie Mac.

These steps could help a typical family save $3,000 or more per year.

• Cut Red Tape so Responsible Families Can Get a Mortgage: There are still millions of families with strong enough credit profiles to qualify for a mortgage but who are nonetheless being denied loans. According to the Federal Reserve, from 2007 to 2012, mortgage lending to borrowers with credit scores above 780 fell by a third, while lending to borrowers with credit scores between 620-680 declined by roughly 90%. For many of these borrowers, they are denied a loan because lenders are unclear of the rules of the road for lending and are protecting themselves by only lending to those with the most pristine credit. The Administration is continuing to work with housing regulators and stakeholders on reasonable approaches to clarify rules and reduce overlapping regulations, in order to expand access to credit for qualifying families. The CFPB’s recently finalized Qualified Mortgage (QM) rule is an important step forward in providing certainty while protecting consumers. The FHA is completing its own QM rule to align with the CFPB and ensure access for the wide-range of responsible borrowers that the agency has historically served. In other cases, temporary unemployment or other hardships that borrowers have overcome still stand in the way of getting a mortgage, even though these borrowers may have strong pay histories and have gotten back on their feet. Going forward:
  
  
  • Regulators should implement mortgage related rules in a way that encourages the clarity and certainty that leads to broad access to credit and a safe and sound system.
    
    
  • We need to establish more certain, brighter-line rules for when government will rescind its guarantees, to give lenders greater clarity and encourage more lending to creditworthy borrowers. HUD is working to update its rules along these lines, and will work with FHFA and other federal agencies to institute a common framework for government guarantees across the market.
    
    
  • FHA is also working on additional lending flexibilities through an initiative called "Back to Work" that will make certain that creditworthy re-employed borrowers with strong recent pay histories are not unfairly excluded from access to FHA lending, while doing so in a responsible manner that protects the FHA Mutual Mortgage Insurance Fund (MMIF).
  <…>

- more -

http://www.whitehouse.gov/the-press-office/2013/08/05/fact-sheet-better-bargain-middle-class-housing