Obama unveiled his sweeping proposal to restore the housing sector to its pre-2008-crisis health during a speech Tuesday in Phoenix, which was home to one of the highest foreclosure rates in the country after the housing bubble burst.
{mosads}A key facet of his plan is aimed at helping responsible victims of the crisis to get approved for a loan, even if their credit took a hit during the recession.
“We should simplify overlapping regulations and cut red tape for responsible families who want to get a mortgage, but who keep getting rejected by banks,” Obama said. “And we should give well-qualified Americans who lost their jobs during the crisis a fair chance to get a loan if they’ve worked hard to repair their credit.”
Earlier Tuesday, Housing and Urban Development Secretary Shaun Donovan explained the proposed initiative, dubbed “Back To Work,” in more depth.
Donovan said many of the 7.3 million Americans hired in private-sector jobs over the last 41 months had lost a job or seen their hours slashed during the recession. Some lost their homes or saw their credit scores plummet.
Under current rules, borrowers must demonstrate three years of solid credit before qualifying for a mortgage through the Federal Housing Administration.
“They’re now getting back to work,” Donovan said. “What we’re saying is if they’ve had a full year of being able to show they’re back to being able to have very strong credit, pay on their mortgages, we ought to take additional steps to help them be able to buy a home or to refinance or do other things with their mortgage.”
Donovan said the administration is intent on “streamlining duplicative regulations, simplifying those; setting clear rules of the road for enforcement going forward.”
In his remarks, Obama also touted the work of the Consumer Financial Protection Bureau, which earlier this year laid out new “qualified mortgage” regulations meant to ensure lenders verify the finances of would-be homeowners and that borrowers have enough income and assets to repay their loan.
The Bureau is working on additional measures to protect homebuyers, he said.
“They’re designing a new, simple mortgage form in plain English, with no fine print, so you know before you owe,” Obama said.