Can Obama save millions from foreclosure?

His massive stimulus plan now signed into law, President Barack Obama is turning to attack the home foreclosure crisis at the heart of the nation’s deepening economic woes.

His goal is to prevent millions of American families from losing their houses because they can’t make mortgage payments.

"We must stem the spread of foreclosures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their homes," Obama said Tuesday as he signed his tax cut and spending package into law.

The ambitious plan he was announcing at a Phoenix high school Wednesday was expected to offer government cash to mortgage companies that reduce interest rates — and therefore monthly payments — for homeowners in danger of default, according to several people briefed on the plan. What remained unclear was how the government will decide who qualifies for relief.

One Democratic official familiar with the plan said it also would allow homeowners to refinance their mortgages if they owed more than their homes were valued. Still another section would give bankruptcy judges more authority to change mortgages. That last provision has been opposed by lenders, who said it would add risk and lead to higher interest rates.

The official, who spoke on the condition of anonymity to avoid pre-empting the president, said the Obama administration also would use Fannie Mae and Freddie Mac to help prevent borrowers from defaulting on their mortgages, and create national standards for loan modifications.

The biggest players in the mortgage industry already had halted foreclosures pending Obama’s announcement.

Obama’s announcement was coming a day after he signed into law a $787 billion economic stimulus plan he hopes will spark an economic turnaround and create or save 3.5 million jobs.

In a ceremony at the Denver Museum of Nature and Science, he hailed the plan’s spending on green technology, education and health care, as well as badly needed repair of roads and bridges, and said those, plus middle-class tax cuts, represent the "essential work of keeping the American dream alive in our time."

Obama cautioned that the initiative isn’t "the end of our economic troubles. Nor does it constitute all of what we are going to have to do to turn our economy around. But today does mark the beginning of the end."

Republicans dismissed the stimulus plan as hugely expensive and unlikely to succeed. To House Minority Leader John Boehner, R-Ohio, it was "a missed opportunity, one for which our children and grandchildren will pay a hefty price."

At the same time, the administration was grappling with the darkening prospects for the U.S. auto industry.

Even as Detroit carmakers submitted restructuring plans to qualify for continued government loans, General Motors Corp. and Chrysler LLC asked for another $14 billion in bailout cash.

White House press secretary Robert Gibbs said the car companies’ plans were being reviewed, but added, "It is clear that going forward, more will be required from everyone involved — creditors, suppliers, dealers, labor and auto executives themselves — to ensure the viability of these companies."


Associated Press writers Alan Zibel and Liz Sidoti contributed to this report.


  1. Carl Nemo

    The president has the power through the issuance of Executive Orders to declare a moratorium on all foreclosures for whatever period of time that’s necessary to sort through this national banking debacle. This is an “emergency” and instead of presidents signing endless XO’s with few to our benefit then he and his office could stem the tide by stopping the banks’ ruthless business of foreclosures.

    The banks or its mortgage assignees aren’t getting their monthly payments, but simply going the through process of foreclosure ends up with them holding just another piece of vacant property that is subject to vandalism and overall decay due to no occupancy. Most people have some pride, so if through an Executive Order they manage to stay in their homes and send in at least a couple hundred bucks a month then it’s better than nothing to the banks and they virtually have caretakers for their properties. These owners should also always get the first option to repossess their properties or to reestablish a normal loan relationship with the banks before any foreclosure ultimately proceeds after the emergency period.

    Here’s a link to all Executive Orders, possibly one of the best available; ie., The Federal Register. Readers who take the time to peruse its content will be stunned by the fiat power the Executive Branch has over the functioning of our government and all citizens of this nation in times of a declared emergency. It doesn’t have to be keyed to a terror attack or an act of war either. Nixon declared wage and price controls during his tenure. They didn’t work all that well, but it provided a cooling down period from what seemed to be movement into a hyperinflationary spiral.

    Carl Nemo **==

  2. almandine

    Not Only Can He……………..

    He will! In fact, are those folks who couldn’t possibly pay those mortgages the ones he got elected by? Is that not part of the transfer of wealth he has intended all along? Of course it is!

    He just earmarked $75B bucks for that action. What are you thinkin’ Ranter?

  3. griff

    I happen to remember some man-on-the-street interviews of Obama supporters claiming he was going to pay off their mortgages and basically rain money down from heaven. One actually insisted she wouldn’t have to work anymore. Such is the attraction of the welfare state to an increasingly lazy and stupid populace.

  4. AustinRanter

    Almadine…you’re right about the population who voted for Obama, and who will indeed be recipients of the $758 Billion earmark you raised.

    But, I suggest that since the vast majority of mortgage loans were converted into securities…and the identities of so many of the loans (original lien holders on Deeds of Trust) are either lost…or that figuring out the value of these derivatives will be impossible to calculate. Not even Obama is savvy enough to figure that out.

    Obama hired a number of people who helped promote or voted on the legislation that deregulated the derivaties market and banks jumping into the securities selling market…oh, man, we have a mess unlike any other in the history of the frickin world,much less our nation.

    People across the country who ask for copies of the mortgage loan agreements …can’t be produced. Now, after another trillion is spent trying to figure out who owe what to whom…and where the underlying collateral documents are…well, good luck to all.

    It’s damn hard to list a security on a Deed of Trust. Securites, for all practical purposes are the same as cash. But now we have literally trillions of dollars of securties that are, unregulated, and suspended somewhere in never-ever land.

    But one thing for certain…the marketeers and CEOs of lending institutions have skimmed off their mega billions out of this mess before they all got caught stealing from people around the world.