Obama bypasses Congress with mortgage plan

25 Oct 2011, 8:53 am   -   Source: AAP
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US President Barack Obama looked to ease the economic and political fallout of a housing crisis by offering mortgage relief.

US President Barack Obama looked to ease the economic and political fallout of a housing crisis that has bedevilled him as he seeks a second term, offering mortgage relief to hundreds of thousands of Americans.

The president said on Monday that "where they won't act, I will". He made the comments in remarks prepared for a stop in Las Vegas as he began a three-day Western trip.

His new housing initiative would allow homeowners who are still current on their mortgage payments to refinance no matter how much their home value has dropped. It's a recognition that measures the administration has taken so far haven't done as much as had hoped on housing.

And Obama said that he'll be going around Congress to take executive action wherever possible, with Republican lawmakers prepared to block his initiatives.

His jobs bill struggling in Congress, Obama tried a new catchphrase - "We can't wait" - to highlight his administrative initiatives and to shift blame to congressional Republicans for lack of action to boost employment and stimulate an economic recovery.

Later in the week, Obama plans to announce measures to make it easier for college graduates to pay back federal loans.

While Obama has proposed prodding the economy with payroll tax cuts and increased spending on public works and aid to states, he has yet to offer a wholesale overhaul of the nation's housing programs.

Economists point to the burst housing bubble as the main culprit behind the 2008 financial crisis. Meanwhile, the combination of unemployment, depressed wages and mortgages that exceed house values has continued to put a strain on the economy.

"There is no silver bullet," White House press secretary Jay Carney told reporters aboard Air Force One, and he acknowledged that the president's unilateral measures have their limits.

"They are not a substitute to congressional action."

While the White House tried to avoid predicting how many homeowners would benefit from the revamped refinancing program, the Federal Housing Finance Administration estimated an additional one million people would qualify. Moody's Analytics say the figure could be as high as 1.6 million.

Under Obama's proposal, homeowners who are still current on their mortgages would be able to refinance no matter how much their home value has dropped below what they still owe.

In spelling out the plan to homeowners in a Las Vegas neighbourhood, Obama has chosen a state that provides the starkest example of the toll the housing crisis has exacted from Americans.

One in every 118 homes in the state of Nevada received a foreclosure notice in September, the highest ratio in the country, according to the foreclosure listing firm RealtyTrac.

Carney criticised Republican presidential candidate Mitt Romney for proposing last week while in Las Vegas that the government not interfere with foreclosures.

"Don't try to stop the foreclosure process," Romney told the Las Vegas Review-Journal.

"Let it run its course and hit the bottom."

"That is not a solution," Carney said.

"That is a solution that basically says to middle-class Americans who have been responsibly paying their mortgages, who, through no fault of their own, have seen their economic situation get quite desperate because of the crisis in the housing market, that 'you're on your own, tough luck, I'm not going to help you."'

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