Obama Says Plan Will Shore Up Foreclosures, Create Incentives in Housing Market
President Barack Obama told a cheering crowd at Dobson High School in Mesa that the $787 billion stimulus act he signed into law yesterday will create jobs and restore the housing market to stability.
Though the speech was loaded with vague rhetoric, Obama focused on a few of the details he said would shore up the housing market by reducing foreclosures that lead to lower-than-normal neighborhood property values.
The new law will save the homes of up to four million Americans from foreclosure by requiring banks to reduce mortgage payments in certain cases to no more than 31 percent of the borrower's income. To hold up their end of the deal, borrowers must make timely payments.
"There will be a cost associated with this plan," Obama said. "But by making these investments against foreclosures today, we'll save ourselves from the cost of foreclosures tomorrow."
Obama said the plan also:
*Takes $200 billion in pre-approved bailout money to ensure the government-owned mortgage companies Freddie Mac and Fannie Mae continued to buy up mortgages;
*Gives $2 billion in community grants for programs that stave off foreclosures;
*And modifies bankruptcy rules so that the mortgage payments on a primary residence must be reduced for some homeowners.
His plan won't help the "unscrupulous and irresponsible," he said, emphasizing that people need to regain their common sense about increases in home values. Big banks, lenders, home buyers and the nation's leaders are all culpable in the current economic crisis, Obama said.
Fixing the problem will "require all of us to step back and take responsibility," Obama said shortly before leaving the stage.
The speech was relatively short -- about 20 minutes -- which probably went by quickly for the people who had waited in line for hours this morning to see Obama. Still, it's likely that few, if any, people in attendance went home disappointed. Judging by the chants prior Obama's appearance -- "Yes we did! Yes we did! -- and the cheers and applause his words received, the people packing the high school auditorium weren't typical residents of Mesa.