Bloomberg News

Obama Promotes Mortgage Plan While Pressuring Congress

October 25, 2011

(Adds comments on immigration in 25th paragraph. For more on the 2012 presidential campaign, see ELECT.)

Oct. 25 (Bloomberg) -- President Barack Obama said he will take executive action to move ahead with his economic proposals while keeping up pressure on Congress to act on his broader package of tax cuts and spending.

In Nevada, the state with the highest foreclosure rate, Obama yesterday promoted an initiative by the Federal Housing Finance Agency to let qualified homeowners refinance mortgages regardless of how much their houses have dropped in value.

With the president on a three-day trip to Nevada, California and Colorado, the administration also plans to outline measures to help veterans find jobs and help students manage education loans.

“We can’t wait for an increasingly dysfunctional Congress to do its job,” Obama said in Las Vegas outside the home of Jose and Lissette Bonilla after talking with them about housing values. “I’ve told my administration to keep looking every single day for actions we can take without Congress.”

He criticized Republican presidential candidates for failing to recommend anything to improve the economy while favoring cutting back on environmental regulations and keeping tax cuts for the wealthiest Americans.

Campaign Mode

The president was in full campaign mode yesterday, holding babies and small children after talking to a family in a Las Vegas subdivision. He made an unannounced stop to shake the hands of unsuspecting customers at Roscoe’s House of Chicken and Waffles in Los Angeles -- and ordered chicken wings -- before attending two fundraisers.

Obama is heading into the 2012 election year with the nation’s unemployment rate stalled at 9.1 percent in September and the White House Office of Management and Budget forecasting it will average 9 percent. The sagging housing market is a drag on growth, which the administration projects will be 2.6 percent next year.

“Probably the single greatest cause of the financial crisis and this brutal recession has been the housing bubble that burst four years ago,” Obama said. “And as long as this goes on, our recovery can’t take off as quickly as it would after a normal recession.”

To help revive the housing market, the FHFA will enhance the Home Affordable Refinance Program, or HARP, by eliminating some fees, reducing others and waiving some risk for lenders. The agency is lifting the previous limit on aid to homeowners on mortgages no greater than 125 percent of the value of the property.

On-Time Payments

To qualify, borrowers must be making on-time payments on loans owned or guaranteed by Fannie Mae or Freddie Mac, the mortgage-finance firms placed under U.S. conservatorship in 2008.

About 11 million borrowers owe more on their mortgages than their homes are worth. HARP was started in 2009 with a goal of reaching 5 million borrowers. As of August, fewer than 895,000 borrowers have been helped. That number could double by the end of 2013 under the expanded program, according to an FHFA projection.

Mortgage lenders welcome the modification to the program, said David H. Stevens, president and chief executive officer of the Mortgage Bankers Association in Washington. “These changes alone should encourage lenders to more actively participate.”

Referendum on Obama

Republicans are seeking to make the presidential election a referendum on Obama’s handling of the economy. He is countering by accusing opponents in Congress of blocking measures that would help spur hiring and economic growth.

“Last week, for the second time this month, Republicans in the Senate blocked a jobs bill from moving forward,” Obama said in Las Vegas. “It was paid for, and it was supported by an overwhelming majority of the American people. But they still said no.”

Senate Minority Leader Mitch McConnell has said the president got most of what he wanted when Democrats controlled the House and Senate during the first two years of his administration and it didn’t work.

“Their policies are in place,” the Kentucky Republican said on CNN’s “State of the Union” program on Oct. 23. “And they are demonstrably not working.”

Opposing Jobs Plan

Alluding to McConnell yesterday, Obama said Republicans may be opposing his jobs plan “because I’m the one that’s sponsoring it.”

Obama won the three states he is visiting and all have a higher unemployment rate now than they did when he took office. While California has been reliably Democratic in the last five presidential elections, Colorado and Nevada are swing states that went Republican in 2000 and 2004. Nevada has the highest home foreclosure and unemployment rates, 13.4 percent, in the country.

“He’s going to those states where Democrats have been valued in the recent election; he’s hoping the appeal of 2008 can be rekindled,” said Julian Zelizer, a professor of history and public affairs at Princeton University in New Jersey. “It’s more hostile territory at this point. If he felt confident, he wouldn’t have to go back.”

Obama also is seeking to raise at least $5 million with six fundraisers during the trip. He also will make an appearance today on NBC’s “The Tonight Show with Jay Leno.”

Las Vegas Fundraiser

His first campaign stop yesterday was the Bellagio Hotel for an event where ticket prices started at $1,000. In addition to the Las Vegas fundraiser, Obama attended two more events last night in Los Angeles.

One was at the Hancock Park home of film producer James Lassiter where tickets went for $35,800, according to a Democratic Party official.

Obama told approximately 40 guests, including Earvin “Magic” Johnson, the former Los Angeles Lakers star turned entrepreneur, actor Will Smith and his wife actress Jada Pinkett Smith, and singer and actress Hillary Duff, that he’s gotten “about 60 percent” of what he’s wanted accomplished. “That’s not bad for three years because I need another five.”

Obama then went to the home of actress Melanie Griffith for another fundraiser with about 120 people. Tickets for the event started at $5,000, the party official said.

Once there, Obama talked about the Bonillas, who came to the U.S. as undocumented workers, got legal status through an amnesty program and raised three children in a one-bedroom apartment before buying a house. Efforts to overhaul immigration policy by granting residency to certain younger illegal immigrants stalled a year ago.

‘Have to Fight’

“We are going to have to fight to make sure that immigration reform is a reality,” Obama told an audience that included Los Angeles Mayor Antonio Villaraigosa and Labor Secretary Hilda Solis. “In order to get it done, we’ve got to have the same determination, the same focus, the same hard- headedness, the same passion that that family I saw in Las Vegas today has.”

Since taking office, Obama has visited California 10 times and almost every stop has included a fundraiser. On Sept. 25-26, he went to fundraisers at the home of Facebook Inc. Chief Operating Officer Sheryl Sandberg, Symantec Corp. Chairman John W. Thompson and two star-studded fundraisers in West Hollywood.

The campaign also has fundraisers scheduled in San Francisco and Denver.

--With assistance from Hans Nichols, Lorraine Woellert, Margaret Talev and Roger Runningen in Washington. Editors: Joe Sobczyk, John Brinsley

To contact the reporter on this story: Kate Andersen Brower in Los Angeles at kandersen7@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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