President Obama’s mortgage relief for military service members and homeowners with Federal Housing Administration loans could affect up to three million people. KERA’s Bill Zeeble reports that may impact just a fraction of those who need help.
For those who have suffered through foreclosures and others in trouble with mortgage payments, President Obama offered a new form of relief during Tuesday’s press conference.
President Obama: We are cutting by more than half, the refinance fees that families pay for loans insured by the FHA. That’s going to save a typical family in that situation an extra thousand dollars a year on top of the savings that they would also receive from refinancing.
The relief also helps military service members. It will aid those who went through wrongful foreclosures, those denied a chance to reduce high interest rates, and it will offer veterans better overall mortgage terms. Still, that may not help most people in mortgage trouble. Government officials say only a few thousand military members may benefit from this plan. Economist Bernard Weinstein, at SMU’s Cox School of Business, says for millions of others nationwide, this aid amounts to a drop in the bucket.
Weinstein: FHA insured borrowers are only a small fraction of the 80-90 million mortgage holders out there. So it’s not clear to me that cutting monthly out-of-pocket expenses for, as the President says, two million to three million borrowers, is going to have that much of an impact.
Weinstein says whatever the relief, those who’ve lost jobs still won’t be able to make even reduced payments.
Weinstein: So I’m very skeptical that the President’s plan, which he can put in place without Congressional approval, will have much real impact. On the other hand it’s probably a smart thing to do politically.
Weinstein says the real challenge is reducing the number of foreclosed homes, and those near foreclosure. That adds up to millions nationwide, and more than half a million in Texas, according to the Wall Street Journal.