Next Tuesday marks the beginning of a new presidential administration. No matter where you fall in the political spectrum, and politics aside, let’s take a closer look at Obama’s plan-to-date on topics related to home ownership.
For the immediate quarter or two you can expect volatility to continue in the financial and credit markets. This means mortgage rates too. Rates are at historic lows with 30 year fixed rates less than 5%.
2. More Economic Stimulus
Since trouble in the economy won’t wait until January 20th, plans for another economic stimulus package are already in the works, so we might even see this happen, in one form or another, before Obama takes office.
Obama has discussed a housing stimulus to stem the tide of foreclosures, including a temporary 90-day freeze on foreclosures, as well as measures to address the demand side of the housing issue. This package includes $25 billion in state fiscal relief, which Mortgage Law Central says will help avoid “painful property tax increases.”
Obama also wants to “aggressively and comprehensively” implement the recently-passed rescue plan and the Hope for Homeowners Act. This means the Treasury, HUD, Fannie Mae and Freddie Mac, and all of the banks and loan servicers who benefit from the rescue bill will continue to coordinate broad mortgage restructurings and loan modifications for struggling homeowners. No one knows for sure exactly how this will be implemented or what it even looks like yet, but we’ll keep you updated as the details are released.
3. Reformed Bankruptcy Laws
Obama has promised to repeal the 2005 bankruptcy bill. A controversial measure, this will allow judges to alter mortgage terms during a bankruptcy, providing more relief for struggling homeowners.
4. New Mortgage Interest Tax Credit
Obama is expected to create a 10% universal mortgage interest credit for those who don’t currently itemize. This means about $500 in savings for 10 million American homeowners.
5. Protection Against Mortgage Fraud and Predatory Lending
During the campaign, Obama blamed the financial crisis on lax government regulations, so look for tougher regulations, new criminal penalties for mortgage fraud violators, more funding for enforcement programs, more detailed loan disclosure laws, new counseling programs and other consumer protections, including a new Home Obligation Made Explicit (HOME) score (kind of like an new APR calculation) to help borrowers better understand and compare mortgage costs during the mortgage process.
This should go a long way in protecting new home buyers from the opportunists that have given good mortgage professionals a bad name in the last few years. We hope that any new measures introduced by the Obama administration will help as the real estate market begins to change for the better in 2009 and beyond.