LAS VEGAS (AP) — The Obama administration offered mortgage relief on Monday to hundreds of thousands of Americans in the latest attempt to ease the economic and political fallout of a housing crisis that has bedeviled President Barack Obama as he seeks a second term.
Obama was pitching new rules for federally guaranteed loans in Las Vegas, the epicenter of foreclosures and joblessness, in recognition that measures the administration has taken so far have not worked as well as officials had expected. The housing effort represents a new emphasis on executive steps he can take to address economic ills and other domestic challenges while circumventing Republican lawmakers, who have been blocking most of his proposals.
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 1 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 in a Las Vegas neighborhood, 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 criticized 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.'”
The president also was using his visit to Las Vegas to promote a $15 billion neighborhood revitalization plan contained in his current jobs proposal that would help redevelop abandoned and foreclosed properties and stabilize affected neighborhoods.
The Nevada stop is the first leg of a three-day tour of western states, blending his pitch for boosting the economy with an aggressive hunt for campaign cash.
From Nevada, Obama will head for the glamor of Hollywood and the homes of movie stars Melanie Griffith and Antonio Banderas and producer James Lassiter for some high-dollar fundraising. On Tuesday, he will tape an appearance on “The Tonight Show” with Jay Leno, his second time on the show as president and fourth time overall. He will also raise money in San Francisco and in Denver.
The mortgage assistance plan by the Federal Housing Finance Administration will help borrowers with little or no equity in their homes, many of whom are stuck with 6 or 7 percent mortgage rates, to seek refinancing and take advantage of lower rates. The FHFA plans to remove caps that had allowed homeowners to refinance only if they owed up to 25 percent more than their homes are worth.
The refinancing program is being extended until the end of 2013. It was originally scheduled to end in June 2012.
The administration’s incremental steps to help homeowners have prompted even the president’s allies to demand more aggressive action.
Rep. Dennis Cardoza, a moderate Democrat from California, gave voice to Democratic frustration on the housing front last week when he announced his decision not to seek re-election, blaming the Obama administration directly for not addressing the crisis.
“I am dismayed by the administration’s failure to understand and effectively address the current housing foreclosure crisis,” Cardoza said in a statement that drew widespread attention. “Home foreclosures are destroying communities and crushing our economy, and the administration’s inaction is infuriating.”
Obama’s new “We can’t wait” slogan is his latest in a string of stump-speech refrains he hopes will pressure Republicans who oppose his $447 billion jobs package. He initially exhorted Congress to “Pass this bill!” then demanded “I want it back,” all in the face of unanimous Republican opposition in the Senate, though even some Democrats were unhappy with the plan.
Obama has now agreed to break the proposal into its component parts and seek congressional approval one measure at a time. The overall proposal would increase taxes on millionaires, lower payroll taxes on workers and businesses for a year, pay for bridge, road and school construction projects, and help states and local governments retain teachers and emergency workers on the job.
Divvied up, the proposals with the best chance of passage are the payroll tax cuts and extensions in jobless insurance to the long-term unemployed.
Countering Obama’s criticism, GOP leaders say the sluggish economy and stubbornly high unemployment rate are the result of failed Obama administration policies, including the 2009 stimulus package and financial regulation bill.
“They got everything they wanted from Congress the first two years,” Senate Minority Leader Mitch McConnell, R-Ky., said Sunday. “Their policies are in place. And they are demonstrably not working.”