Lawmakers on board with housing changes, demand more

Rep. Dennis Cardoza (D-Calif.), one of the administration’s biggest critics on housing policy, doesn’t think the changes go far enough. 

“It’s far too little, it’s just baby steps,” Cardoza said. “They’re still not getting it.”

The plan fell flat with some House Republicans.  

“Everyone understands that the challenges facing many American homeowners contributes to our jobs crisis, but the White House’s efforts have been a miserable failure,” said Michael Steel, spokesman for Speaker John Boehner (R-Ohio). “A better approach would be to work with Republicans on solid, sustainable pro-growth policies that get our economy moving again and create jobs.”

Two administration officials — Housing and Urban Development Secretary Shaun Donovan and Gene Sperling, director of the National Economic Council — said the changes represent one step in a long ladder of policy changes designed to not only boost the ailing housing market but spur the economic recovery. 

“The president is committed to attacking the housing crisis on all fronts, and this is one part of the arsenal,” Sperling said during a conference call with reporters. “But it’s only one part, and there cannot be a serious effort to improve the housing situation if there aren’t jobs.”

Donovan made clear that while the White House takes executive steps to help the housing sector, “legislative steps could have a much more powerful impact.” He acknowledged, however, that such measures “are unfortunately not in the cards.”

For the time being, they are making the changes they can in lieu of congressional action.

Donovan said there’s still significant work that remains to be done to help homeowners current on their mortgage payments but hampered by loans that exceed the value of their homes.

FHFA is expected to announce a detailed plan on Nov. 15, the officials said. From there the administration will begin implementing the changes. 

Sperling and Donovan emphasized that while changes have been in the pipeline for months, it took a cooperative effort of all stakeholders — including mortgage insurers, appraisers, title companies and servicers — to solve the complex maze of barriers. 

Without that agreement, the plans announced Monday “wouldn’t be nearly as an effective set of steps.” 

Sperling called the action a “growing awareness among all stakeholders” that changes needed to be made. 

The new FHFA plan bears some resemblance to a bill introduced by Sens. Barbara Boxer (D-Calif.) and Johnny Isakson (R-Ga.) designed to help more than 2 million homeowners underwater on their mortgages — about double the number of the revised FHFA plan, although administration officials wouldn’t say how many the program could help. 

“I am very pleased that the administration is taking these steps to help responsible homeowners refinance at historically low interest rates,” Boxer said. “Allowing these homeowners to refinance at today’s record low rates will keep families in their homes and boost the economy by putting thousands of dollars back in the pockets of borrowers. I urge FHFA to move swiftly to assure that these new policies will help as many homeowners as possible.”

Isakson said, “This is a positive step in the right direction for the preservation of homeownership for those Americans who have been making their payments and met their obligations. They deserve the benefit of today’s lower interest rates.”

Mark Zandi, chief economist at Moody’s Analytics, estimated that the new plan could help an additional 1.6 million homeowners refinance by the end of 2013, the newest deadline for the program, which is being extended by 18 months. 

Administration officials said some homeowners could save upward of $2,500 a year, allowing them to shift their spending into other sectors of the economy. 

Interest rates remain near historically low levels, at 4.11 percent for a 30-year fixed mortgage.