Obama to Unveil $75 Billion Mortgage Relief Plan
The plan, which Obama is releasing later Wednesday, is more ambitious than initially expected -- and more expensive. It aims to aid borrowers who owe more on their mortgages than their homes are currently worth, and borrowers who are on the verge of foreclosure.
The initiative is designed to help up to 5 million borrowers refinance, and provides incentive payments to mortgage lenders in an effort to help up to 4 million borrowers on the verge of foreclosure.
"All of us are paying a price for this home mortgage crisis," Obama says in a prepared text of remarks scheduled shortly after 12 noon EST Wednesday at a Phoenix area high school.
Headlining the plan was a $75 billion Homeowner Stability Initiative, under which would provide incentives to lenders to cut monthly mortgage payments to sustainable levels. It defines this at no more than 31 percent of a homeowners income.
Another key component: a new program aimed at helping homeowners said to be "under water" -- with dwellings whose value have sunk below the principal still owing on their mortgages. Such mortgages have traditionally been almost impossible to refinance. But the White House said its program will help 4 to 5 million families do just that.
Announcing his plan in a state hard hit by the housing crunch, Obama said that stemming the tide of foreclosures is key to turning around the recession-bound economy.
"In the end, all of us are paying a price for this home mortgage crisis. And all of us will pay an even steeper price if we allow this crisis to deepen," he said, according to the advance text.
The plan also seeks to bolster confidence in Fannie Mae and Freddie Mac, the mortgage giants effectively taken over by the government last year. The White House said the Treasury will increase its funding commitment to the two using money Congress set aside last year, and will continue purchasing mortgage-backed securities from them.
The biggest players in the mortgage industry already had halted foreclosures pending Obama's announcement.
The president's announcement was coming a day after he signed into law a $787 billion economic stimulus plan he hopes will spark an economic turnaround and create or save 3.5 million jobs.
In a ceremony at the Denver Museum of Nature and Science, he hailed the plan's spending on green technology, education and health care, as well as badly needed repair of roads and bridges, and said those, plus middle-class tax cuts, represent the "essential work of keeping the American dream alive in our time."
Obama cautioned that the initiative isn't "the end of our economic troubles. Nor does it constitute all of what we are going to have to do to turn our economy around. But today does mark the beginning of the end."
Republicans dismissed the stimulus plan as hugely expensive and unlikely to succeed. To House Minority Leader John Boehner, R-Ohio, it was "a missed opportunity, one for which our children and grandchildren will pay a hefty price."
At the same time, the administration was grappling with the darkening prospects for the U.S. auto industry.
Even as Detroit carmakers submitted restructuring plans to qualify for continued government loans, General Motors Corp. and Chrysler LLC asked for another $14 billion in bailout cash.
White House press secretary Robert Gibbs said the car companies' plans were being reviewed, but added, "It is clear that going forward, more will be required from everyone involved -- creditors, suppliers, dealers, labor and auto executives themselves -- to ensure the viability of these companies."
Alan Zibel reported from Washington; Associated Press Writer Liz Sidoti also contributed to this report.