Obama Targets Fannie, Freddie in Housing Finance Revamp - East Idaho News
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Obama Targets Fannie, Freddie in Housing Finance Revamp

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175698409?  SQUARESPACE CACHEVERSION=1375832228827MANDEL NGAN/AFP/Getty Images(PHOENIX, Ariz.) — President Obama on Tuesday touted the housing recovery as he outlined his plan to overhaul the nation’s mortgage finance system going forward.
 
Speaking at the epicenter of the housing crisis, the president laid out proposals to end the financial control of mortgage giants Fannie Mae and Freddie Mac, the agencies that back up the nation’s mortgage system.
 
“As home prices rise, we can’t just re-inflate another housing bubble,” President Obama said at Desert Vista High School in Phoenix Tuesday. “What we want to do is something stable and steady and that’s why I want to lay a rock-solid foundation to make sure the kind of crisis we went through never happens again. “
 
“One of the key things to make sure it doesn’t happen again is to wind down these companies that are not really government, but not really private sector; they’re known as Freddie Mac and Fannie Mae,” Obama said. “For too long, these companies were allowed to make huge profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bet. It was heads, we win; tails, you lose. And it was wrong.”
                              
The president outlined four principles to reform the nation’s mortgage system — boosting the role of private capital in the mortgage market, ending the use of bailouts, continuing to provide access to mortgage products like the 30 year fixed rate mortgage, and keeping housing affordable.
 
Fannie and Freddie collapsed in 2008, but were bailed out by the federal government with roughly $200 billion in taxpayer money.
 
“They had a model for getting loans to the American people that didn’t work.  It was basically, heads they win, tails taxpayers lose model and so what the president is going to say today is we need to end that model.  And we need to have a housing financing system going forward that first makes sure private capital sits at the center of our housing financing system and second we can’t put taxpayers on the hook in the way we did before,” Housing Secretary Shaun Donovan told ABC News.
 
Obama wants the government to play a more limited and targeted role in supporting the mortgage market, one in which private capital must be wiped out before the federal government provides any “catastrophic guarantee.”
 
The president also renewed his call for Congress to make it easier for homeowners to refinance at lower rates and highlighted his plan to make rental housing more affordable for the middle class.
 
“Congress should pass a good bipartisan idea to allow every homeowner the chance to save thousands of dollars a year by refinancing their mortgage at today’s rates. We need to get that done,” he said.
 
President Obama also argued that immigration reform could help increase home ownership rates.  He heaped praise on the two Republican senators from Arizona — Sen. John McCain and Jeff Flake — for helping pass an immigration bill in the Senate and asked the crowd to urge Republican lawmakers to sign onto the bill.
 
“It would actually help our housing market,” Obama said. “With the help of your senators, John McCain and Jeff Flake, the Senate has already passed a bipartisan immigration bill that’s got the support of CEOs and labor and law enforcement. This could help homeownership here. So I want you to encourage Republicans in the House of Representatives to stop, you know, dragging their feet; let’s go ahead and get this done.
 
Tuesday’s speech, the fifth stop on the president’s middle class jobs tour, was intended to bookend the speech he gave in Phoenix in 2009, shortly after he took office. Four years later, the community has rebounded from a time in which half of all homeowners were “underwater” and owned more on their mortgage than their home was worth.
 
“Phoenix has also led one of the biggest comebacks in the country, So you should be proud of what you’ve done here,” Obama said.
 
Obama, who turned 52 on Sunday and reminded the crowd of that in the middle of his speech, was rewarded by devotees on hand who sang “Happy Birthday” to him.
 
“Thank you. I’m now 52. And Michelle says I don’t look a day over 51,” Obama joked.

Copyright 2013 ABC News Radio

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