As reported in Wednesday’s Marietta Daily Journal, the president announced reforms meant to help revitalize the residential real estate market, which has been in the tank since 2007 or so. Obama’s plan is modeled on reforms suggested in the Helping Responsible Homeowners Act co-sponsored by Isakson and Sen. Barbara Boxer (D-Calif.).
“We’ve been working on him to adopt it because it is adoptable by the agency (the Federal Housing Finance Agency) without having to have a statute,” Isakson said.
The proposal has two aspects. The first would eliminate risk-based fees now charged to homebuyers on loans for which Fannie Mae or Freddie Mac are already bearing the risk.
“It just pays attention to those people in America who are making their payments, playing by the rules, trying to ride out this recession and protect their largest investment, which is their house,” Isakson said.
The second would remove refinancing limits for properties whose owners are “underwater” — that is, who owe their mortgage lender more than their home is worth.
“That’s less money out-of-pocket for your payment every month, which is more money in your pocket, which helps the economy,” Isakson said.
There could be as many as two million homes in Georgia eligible for such refinancing, and millions more across the country, Isakson told The Wall Street Journal.
“We’ve got an obvious housing problem, but we also have an awful lot of Georgians who are playing by the rules,” Isakson said. “They’re making their payments. They’re not getting behind even though their houses are underwater. Everybody has been trying to throw money at people who were behind and weren’t making their payments, and the people that were making their payments to stay in their homes are the real heroes through this recession, trying to at least contribute to stabilizing the housing market.”
These proposals by Isakson and Boxer, which Obama was wise to adopt, won’t in themselves cure the economy. But inasmuch as the residential real estate market is one of the key “drivers” of the economy, there is unlikely to be a full-scale recover until that market is back on its feet. And the Isakson/Boxer/Obama effort lends a needed hand to that market.