According to real estate data firm CoreLogic, about 11 million American homeowners are underwater, and half of all U.S. mortgages are owned by non-government lenders. On Wednesday, President Obama announced plans to help homeowners facing foreclosure. Obama is seeking to make interests rates for borrowers lower, and he plans to pay for the estimated $5 billion to $10 billion cost with a fee on the nation’s largest banks.
“It is wrong for anyone to suggest that the only option for struggling, responsible homeowners is to sit and wait for the housing market to hit bottom,” Obama said. “I refuse to accept that, and so do the American people.”
Opponents of the president’s new plan vehemently disagree. House Speaker John Boehner explained that the market needs to correct itself, saying, “All it does is delay the clearing of the market. As soon as the market clears and we understand where the prices really are—[that] will be the most important thing we can do in order to improve home values around the country.”
Obama’s plan would save the average underwater American about $3,000 per year and would apply only to borrowers who have been current on their payments for at least six months. Still, many are skeptical of further help for Americans facing foreclosure, as even the president acknowledges that his previous attempts to tackle underwater debts have failed.
Should the government help homeowners with underwater mortgages? Here’s the Debate Club’s take:
Anthony Sanders Real Estate Finance Professor at George Mason University
Mark Calabria Director of Financial Regulation Studies at the Cato Institute
Peter Tatian Senior Research Associate in the Urban Institute's Metropolitan Housing and Communities Policy Center
Ethan Handelman Vice President for Policy and Advocacy at the National Housing Conference