Bloomberg News

Obama Shifts Back to Economy After Fundraising Swing

May 11, 2012

President Barack Obama with Val and Paul Keller after Obama spoke on the economy in front of their  home  on May 11, 2012 in Reno, Nevada. Photographer: Mandel Ngan/AFP/Getty Images

President Barack Obama with Val and Paul Keller after Obama spoke on the economy in front of their home on May 11, 2012 in Reno, Nevada. Photographer: Mandel Ngan/AFP/Getty Images

President Barack Obama shifted his focus back to the economy after three West Coast campaign fundraisers, stopping in the swing state of Nevada to promote his housing initiatives.

During a 90-minute stopover on his way back to Washington, Obama met with a family in Reno to illustrate the need for more action by Congress to assist homeowners. He also reiterated his five-point “to-do list” for lawmakers and criticized Republicans for wanting to return to policies that “just didn’t work.”

“It’s going to take a long time for the economy to fully recover,” Obama said. “There are plenty of steps we can take to speed up the recovery right now.”

Nevada had the nation’s highest rate of foreclosure filings per household at one in 95 in the first quarter, followed by California at one in 103 and Arizona at one in 106. It also has the highest unemployment rate in the U.S., 12 percent in March, compared with the national rate in April of 8.1 percent. That’s down from a high of 14 percent in October 2010.

While Obama carried the state in 2008 with 55 percent of the vote, the state’s slow recovery may give Republican presidential candidate Mitt Romney an opening for the November election, which will turn on voters’ economic concerns.

Refinance Program

To revive the housing market, the administration is trying to expand the Fannie Mae and Freddie Mac refinancing program for homeowners who owe more than their properties are worth to cover more borrowers.

The Home Affordable Refinance Program, known as HARP, reduces some fees and waives risk for lenders who refinance loans that they service for borrowers with less than 20 percent equity in their homes.

Before making remarks, Obama visited the Reno home of Val and Paul Keller. The Kellers paid $127,000 in 1998 for their home in a working class neighborhood of Reno, Val Keller, 66, said in a telephone interview before Obama arrived.

The crash of the housing market forced her husband and son to close their home remodeling business in 2007, and the Kellers refinanced their own house to pay business debts, she said.

Savings

When she heard Obama speak about the HARP program last fall, she and her husband owed $168,000 on a home that was valued at $100,000. She said being able to take advantage of the program is saving them $3,000 a year, money that can put toward the principle.

“I’m hoping that we can stay here long enough that it will at least come back some,” said Keller, who works as an assistant at a company that makes loans to ranchers and farmers.

While Keller said she appreciates Obama’s advocacy on home loans, she declined to say who she plans to vote for in the November presidential election, calling the matter “just too personal.”

Obama said that while the Kellers were able to refinance under HARP, the program must be expanded to let more homeowners take advantage of record low interest rates.

“This is a smart thing to do not only for homeowners but for our economy,” he said.

Housing and Urban Development Secretary Shaun Donovan told lawmakers this week that homeowners with more equity should be allowed to participate and risk should be waived for lenders who refinance loans now handled by other servicers.

Senate Proposal

Senator Robert Menendez, a New Jersey Democrat, and California Democrat Barbara Boxer plan to introduce a bill to expand HARP to as many as 17.5 million more borrowers. The measure would streamline refinancing for borrowers with more than 20 percent equity and would encourage competition among lenders by waiving warranties when they refinance loans.

Obama yesterday raised campaign money in Seattle and Los Angeles. The biggest event was a dinner at the home of actor George Clooney.

The evening brought in almost $15 million, according to co- host Jeffrey Katzenberg, chief executive officer of Glendale, California-based Dreamworks Animation Skg Inc. (DWA:US) That figure includes money from the 150 donors who paid the full ticket price of $40,000 for the event and smaller donations the campaign raised by raffling off a chance to attend the dinner.

To contact the reporter on this story: Margaret Talev in Reno at mtalev@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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