No more games when it comes to refinancing options for responsible homeowners, President Obama said in his third State of the Union address Tuesday night, pledging to send Congress a plan that would give millions of homeowners the chance to refinance their mortgages at today's historically low rates.
"Responsible homeowners shouldn't have to sit and wait for the housing market to hit bottom to get some relief," President Obama said, adding that his refinancing plan would save homeowners $3,000 a year on their mortgages. "No more red tape. No more runaround from the banks."
An expansion of a previous refinancing program, the Home Affordable Refinance Program, which only applied to homeowners with government-backed mortgages, Obama's new plan would also cover loans issued by private mortgage lenders, the Associated Press reported.
Roughly 1 million Americans have already refinanced under HARP, but because about half of all mortgages in the U.S. are owned by private lenders, the number of homeowners eligible to take advantage of the program was limited. Currently more than 11 million homeowners owe more on their mortgage than what their home is worth, according to some estimates.
Anticipating questions on how his administration plans to pay for the program, Obama said a small fee on big banks would ensure the program doesn't add to the nation's deficit. Though it is clear there will be a fight over how much that "small fee" actually turns out to be.
But ever diplomatic, Obama spread the blame for the nation's catastrophic housing meltdown relatively equally between homeowners and financial institutions.
"We've all paid the price for lenders who sold mortgages to people who couldn't afford them, and buyers who knew they couldn't afford them," Obama said. "It's time to apply the same rules from top to bottom: No bailouts, no handouts, and no copouts. An America built to last insists on responsibility from everybody."