Washington: President Barack Obama Wednesday presented a plan to revitalize the US real estate market that would allow millions of homeowners to refinance their mortgages and take advantage of the current historically low interest rates.
Due to the precipitous decline in housing prices in recent years, more than 10 million homeowners now owe the bank more money than their houses are worth, the president emphasized.
The housing crisis “struck right at the heart of what it means to be middle class in America: our homes”, Obama said at a community center in Falls Church, Virginia.
Many families have had to resort to getting help from public programmes to avoid losing their homes, but up to now those initiatives have been unable to handle the enormous scope of the problem.
The plan presented Wednesday seeks to benefit more than a third of the 10 million homeowners whose mortgages are underwater, the White House says.
“Responsible” owners who are current on the payment of their mortgages will be able to refinance them at lower interest rates, meaning that they can save an average of about $3,000 per year, the president said.
In addition to refinancing the mortgages, Obama’s new plan also includes more protection to avoid inappropriate evictions, the sale of foreclosed properties by government agencies so that private investors who pledge to rent them out can do so and greater indulgence for homeowners who lose their jobs.
Obama urged Congress to approve the plan, the cost of which is estimated to be between $5 billion and $10 billion.