Obama Unveils Housing Program Overhaul

President Barack Obama resorted to executive action to overhaul the Home Affordable Refinance Program (HARP) program with aims to put homebuilders and remodelers back to work while also making it easier for homeowners to refinance their mortgages. He shared details of the executive action with a crowd of homeowners on Monday in Las Vegas, one of the areas hardest hit by the burst housing bubble.

The overhaul, dubbed Project Rebuild, has four hallmarks:

• To create construction jobs by rehabilitating vacant or abandoned homes and businesses, which the president said should help stabilize home prices.
• To lift barriers that prevents homeowners who are current on payments from refinancing mortgages after going underwater, or owing more than their houses are worth
• To lower closing costs and eliminate certain refinancing fees that, the president said, often negate refinancing.
• To increase competition among refinancing lenders.

"So you take these things together," Obama said, "this is going to help a lot more homeowners refinance at lower rates, which means consumers save money, those families save money, it gets those families spending again. And it also makes it easier for them to make their mortgage payments, so that they don't lose their home and bring down home values in the neighborhood."

The National Association of Home Builders (NAHB) lauded the president's plan but said that it does little for homeowners who have already fallen behind on their mortgage payments.

"It is encouraging that the Obama administration is beginning to turn its attention to restoring the nation's housing market, which is crucial for the health of our economy," said Bob Nielsen, the group's chairman. "However, for the many families who have fallen behind in their payments because of the weak job market, the changes to HARP will have no benefit. HARP is only open to mortgage borrowers who have remained current with their payments. Clearly, additional policy initiatives are urgently needed to prevent foreclosures and deal with the inventory of foreclosed homes."

Nielsen also offered several other housing issues that should be fixed.

"In addition, it is essential to address overly restrictive mortgage lending standards, inappropriate credit limitations on home builders and a broken appraisal system that is contributing to housing price instability," he said. "All of these factors are detrimental to the full-scale housing recovery we need to rally consumers and get a disappointing economic recovery moving forward."