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President Barack Obama-Remarks on the Home Mortgage Crisis

Mortgage and Lending with Funky Quail Vintage


I received this from a funder today, and thought I would post it for information purposes!  I would love for EVERYONE to share their comments on what is in here based on WHAT they do for a living, and what they see in their communities!  Obviously, there are horror stories EVERYWHERE..and standing out the soapbox, crying, and shouting at the moon, blaming others is also NOT the answer!   I appreciate any and all comments and observations!

President Barack Obama

Remarks on the Home Mortgage Crisis

February 18, 2009

I'm here today to talk about a crisis unlike any we've ever known - but one that you know very

well here in Mesa, and throughout the Valley. In Phoenix and its surrounding suburbs, the American

Dream is being tested by a home mortgage crisis that not only threatens the stability of our economy but

also the stability of families and neighborhoods. It is a crisis that strikes at the heart of the middle class:

the homes in which we invest our savings, build our lives, raise our families, and plant roots in our


So many Americans have shared with me their personal experiences of this crisis. Many have

written letters or emails or shared their stories with me at rallies and along rope lines. Their hardship and

heartbreak are a reminder that while this crisis is vast, it begins just one house - and one family - at a


It begins with a young family - maybe in Mesa, or Glendale, or Tempe - or just as likely in

suburban Las Vegas, Cleveland, or Miami. They save up. They search. They choose a home that feels

like the perfect place to start a life. They secure a fixed-rate mortgage at a reasonable rate, make a down

payment, and make their mortgage payments each month. They are as responsible as anyone could ask

them to be.

But then they learn that acting responsibly often isn't enough to escape this crisis. Perhaps

someone loses a job in the latest round of layoffs, one of more than three and a half million jobs lost since

this recession began - or maybe a child gets sick, or a spouse has his or her hours cut.

In the past, if you found yourself in a situation like this, you could have sold your home and

bought a smaller one with more affordable payments. Or you could have refinanced your home at a lower

rate. But today, home values have fallen so sharply that even if you made a large down payment, the

current value of your mortgage may still be higher than the current value of your house. So no bank will

return your calls, and no sale will return your investment.

You can't afford to leave and you can't afford to stay. So you cut back on luxuries. Then you cut

back on necessities. You spend down your savings to keep up with your payments. Then you open the

retirement fund. Then you use the credit cards. And when you've gone through everything you have, and

done everything you can, you have no choice but to default on your loan. And so your home joins the

nearly six million others in foreclosure or at risk of foreclosure across the country, including roughly

150,000 right here in Arizona.

But the foreclosures which are uprooting families and upending lives across America are only one

part of this housing crisis. For while there are millions of families who face foreclosure, there are millions

more who are in no danger of losing their homes, but who have still seen their dreams endangered. They

are families who see "For Sale" signs lining the streets. Who see neighbors leave, and homes standing

vacant, and lawns slowly turning brown. They see their own homes - their largest single assets -

plummeting in value. One study in Chicago found that a foreclosed home reduces the price of nearby

homes by as much as 9 percent. Home prices in cities across the country have fallen by more than 25

percent since 2006; in Phoenix, they've fallen by 43 percent.

Even if your neighborhood hasn't been hit by foreclosures, you're likely feeling the effects of the

crisis in other ways. Companies in your community that depend on the housing market - construction

companies and home furnishing stores, painters and landscapers - they're cutting back and laying

people off. The number of residential construction jobs has fallen by more than a quarter million since

mid-2006. As businesses lose revenue and people lose income, the tax base shrinks, which means less

money for schools and police and fire departments. And on top of this, the costs to a local government

associated with a single foreclosure can be as high as $20,000.


The effects of this crisis have also reverberated across the financial markets. When the housing

market collapsed, so did the availability of credit on which our economy depends. As that credit has dried

up, it has been harder for families to find affordable loans to purchase a car or pay tuition and harder for

businesses to secure the capital they need to expand and create jobs.

In the end, all of us are paying a price for this home mortgage crisis. And all of us will pay an

even steeper price if we allow this crisis to deepen - a crisis which is unraveling homeownership, the

middle class, and the American Dream itself. But if we act boldly and swiftly to arrest this downward

spiral, every American will benefit. And that's what I want to talk about today.

The plan I'm announcing focuses on rescuing families who have played by the rules and acted

responsibly: by refinancing loans for millions of families in traditional mortgages who are underwater or

close to it; by modifying loans for families stuck in sub-prime mortgages they can't afford as a result of

skyrocketing interest rates or personal misfortune; and by taking broader steps to keep mortgage rates

low so that families can secure loans with affordable monthly payments.

At the same time, this plan must be viewed in a larger context. A lost home often begins with a

lost job. Many businesses have laid off workers for a lack of revenue and available capital. Credit has

become scarce as the markets have been overwhelmed by the collapse of securities backed by failing

mortgages. In the end, the home mortgage crisis, the financial crisis, and this broader economic crisis are

interconnected. We cannot successfully address any one of them without addressing them all.

Yesterday, in Denver, I signed into law the American Recovery and Reinvestment Act which will

create or save three and a half million jobs over the next two years - including 70,000 in Arizona - doing

the work America needs done. We will also work to stabilize, repair, and reform our financial system to

get credit flowing again to families and businesses. And we will pursue the housing plan I am outlining


Through this plan, we will help between seven and nine million families restructure or refinance

their mortgages so they can avoid foreclosure. And we are not just helping homeowners at risk of falling

over the edge, we are preventing their neighbors from being pulled over that edge too - as defaults and

foreclosures contribute to sinking home values, failing local businesses, and lost jobs.

But I also want to be very clear about what this plan will not do: It will not rescue the unscrupulous

or irresponsible by throwing good taxpayer money after bad loans. It will not help speculators who took

risky bets on a rising market and bought homes not to live in but to sell. It will not help dishonest lenders

who acted irresponsibility, distorting the facts and dismissing the fine print at the expense of buyers who

didn't know better. And it will not reward folks who bought homes they knew from the beginning they

would never be able to afford. In short, this plan will not save every home.

But it will give millions of families resigned to financial ruin a chance to rebuild. It will prevent the

worst consequences of this crisis from wreaking even greater havoc on the economy. And by bringing

down the foreclosure rate, it will help to shore up housing prices for everyone. According to estimates by

the Treasury Department, this plan could stop the slide in home prices due to neighboring foreclosures by

about $6,000 per home.

Here is how my plan works:

First, we will make it possible for an estimated four to five million currently ineligible

homeowners who receive their mortgages through Fannie Mae or Freddie Mac to refinance their

mortgages at lower rates.

Today, as a result of declining home values, millions of families are "underwater," which means

they owe more on their mortgages than their homes are worth. These families are unable to sell their

homes, and unable to refinance them. So in the event of a job loss or another emergency, their options

are limited.


Right now, Fannie Mae and Freddie Mac - the institutions that guarantee home loans for millions

of middle class families - are generally not permitted to guarantee refinancing for mortgages valued at

more than 80 percent of the home's worth. So families who are underwater - or close to being

underwater - cannot turn to these lending institutions for help.

My plan changes that by removing this restriction on Fannie and Freddie so that they can

refinance mortgages they already own or guarantee. This will allow millions of families stuck with loans at

a higher rate to refinance. And the estimated cost to taxpayers would be roughly zero; while Fannie and

Freddie would receive less money in payments, this would be balanced out by a reduction in defaults and


I also want to point out that millions of other households could benefit from historically low interest

rates if they refinance, though many don't know that this opportunity is available to them - an opportunity

that could save families hundreds of dollars each month. And the efforts we are taking to stabilize

mortgage markets will help these borrowers to secure more affordable terms, too.

Second, we will create new incentives so that lenders work with borrowers to modify the

terms of sub-prime loans at risk of default and foreclosure.

Sub-prime loans - loans with high rates and complex terms that often conceal their costs - make

up only 12 percent of all mortgages, but account for roughly half of all foreclosures.

Right now, when families with these mortgages seek to modify a loan to avoid this fate, they often

find themselves navigating a maze of rules and regulations but rarely finding answers. Some sub-prime

lenders are willing to renegotiate; many aren't. Your ability to restructure your loan depends on where you

live, the company that owns or manages your loan, or even the agent who happens to answer the phone

on the day you call.

My plan establishes clear guidelines for the entire mortgage industry that will encourage lenders

to modify mortgages on primary residences. Any institution that wishes to receive financial assistance

from the government, and to modify home mortgages, will have to do so according to these guidelines -

which will be in place two weeks from today.

If lenders and homebuyers work together, and the lender agrees to offer rates that the borrower

can afford, we'll make up part of the gap between what the old payments were and what the new

payments will be. And under this plan, lenders who participate will be required to reduce those payments

to no more than 31 percent of a borrower's income. This will enable as many as three to four million

homeowners to modify the terms of their mortgages to avoid foreclosure.

So this part of the plan will require both buyers and lenders to step up and do their part. Lenders

will need to lower interest rates and share in the costs of reduced monthly payments in order to prevent

another wave of foreclosures. Borrowers will be required to make payments on time in return for this

opportunity to reduce those payments.

I also want to be clear that there will be a cost associated with this plan. But by making these

investments in foreclosure-prevention today, we will save ourselves the costs of foreclosure tomorrow -

costs borne not just by families with troubled loans, but by their neighbors and communities and by our

economy as a whole. Given the magnitude of these costs, it is a price well worth paying.

Third, we will take major steps to keep mortgage rates low for millions of middle class

families looking to secure new mortgages.


Today, most new home loans are backed by Fannie Mae and Freddie Mac, which guarantee

loans and set standards to keep mortgage rates low and to keep mortgage financing available and

predictable for middle class families. This function is profoundly important, especially now as we grapple

with a crisis that would only worsen if we were to allow further disruptions in our mortgage markets.

Therefore, using the funds already approved by Congress for this purpose, the Treasury

Department and the Federal Reserve will continue to purchase Fannie Mae and Freddie Mac mortgagebacked

securities so that there is stability and liquidity in the marketplace. Through its existing authority

Treasury will provide up to $200 billion in capital to ensure that Fannie Mae and Freddie Mac can

continue to stabilize markets and hold mortgage rates down.

We're also going to work with Fannie and Freddie on other strategies to bolster the mortgage

markets, like working with state housing finance agencies to increase their liquidity. And as we seek to

ensure that these institutions continue to perform what is a vital function on behalf of middle class

families, we also need to maintain transparency and strong oversight so that they do so in responsible

and effective ways.

Fourth, we will pursue a wide range of reforms designed to help families stay in their

homes and avoid foreclosure.

My administration will continue to support reforming our bankruptcy rules so that we allow judges

to reduce home mortgages on primary residences to their fair market value - as long as borrowers pay

their debts under a court-ordered plan. That's the rule for investors who own two, three, and four homes.

It should be the rule for ordinary homeowners too, as an alternative to foreclosure.

In addition, as part of the recovery plan I signed into law yesterday, we are going to award $2

billion in competitive grants to communities that are bringing together stakeholders and testing new and

innovative ways to prevent foreclosures. Communities have shown a lot of initiative, taking responsibility

for this crisis when many others have not. Supporting these neighborhood efforts is exactly what we

should be doing.

Taken together, the provisions of this plan will help us end this crisis and preserve for millions of

families their stake in the American Dream. But we must also acknowledge the limits of this plan.

Our housing crisis was born of eroding home values, but also of the erosion of our common

values. It was brought about by big banks that traded in risky mortgages in return for profits that were

literally too good to be true; by lenders who knowingly took advantage of homebuyers; by homebuyers

who knowingly borrowed too much from lenders; by speculators who gambled on rising prices; and by

leaders in our nation's capital who failed to act amidst a deepening crisis.

So solving this crisis will require more than resources - it will require all of us to take

responsibility. Government must take responsibility for setting rules of the road that are fair and fairly

enforced. Banks and lenders must be held accountable for ending the practices that got us into this crisis

in the first place. Individuals must take responsibility for their own actions. And all of us must learn to live

within our means again.

These are the values that have defined this nation. These are values that have given substance

to our faith in the American Dream. And these are the values that we must restore now at this defining


It will not be easy. But if we move forward with purpose and resolve - with a deepened

appreciation for how fundamental the American Dream is and how fragile it can be when we fail in our

collective responsibilities - then I am confident we will overcome this crisis and once again secure that

dream for ourselves and for generations to come.

Thank you, God Bless you, and God bless America.


I have a previous blog that is MORE than just informative!  Please review if you get a moment!  Thanks!

Darin@ One Source Mortgage, LLC


Bruce Brockmeier
Internet Marketing Consultant to REALTORS® - Yorba Linda, CA
Coached By Crouch

And all of us must learn to live within our means again.

Amen.  Now let's see our government start doing it.  Talk is cheap.

Feb 18, 2009 07:43 AM
Robert Rauf
CMG Home Loans - Toms River, NJ


Hopefully there is enough money.  and hopefully there is a clear enough plan on who gets the benefit and who does not.  MANY people were just plain DUMB, (financial Darwinism) they just never could afford the houses they purchased.  and it bothers me that they will get bailed out while the vast majority of hard working people that are making their payments get NOTHING... because they did the right thing.  the market is confused today... and unsure of the plan.  Hopefully it works, because the "F" word is not a good thing for any of us.

Feb 18, 2009 07:49 AM
Valorie Stover, Realtor for Casta del Sol
Casta del Sol Real Estate / HomeSmart Everygreen Realty - Mission Viejo, CA
Mission Viejo,CA, Active Adult Community!

I do not think congress will do all that is suggested here. I only hope some of it gets done. The housing industry reaches so far into all our lives, finances, builder, furniture, appliances, new schools, shopping center, Ma and Pa stores, shipping companies. You name it, it has to do with all of us buying or selling housing. One person buying a new house creates so many jobs. Just for one minute think what it takes from the builder though fixing the home the way you want it.

People need hope in their lives.

Feb 18, 2009 07:57 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Hey there Bruce! 

You are right, talk is cheap!  However, I THINK that with this whole CRISIS deal, Obama, and everyone else, is listening to the WRONG PEOPLE!  They need to get people OUT OF THE TRECHES not just with gloom & doom stories, but ones who have done loans, bought & sold homes(especially f words and short sales), and also Underwriters that have UNDERWRITTEN and approved loans!!!   Also, no matter what, we HAVE TO PAY FOR ALL THIS!  My big question is , great ideas, but how do we pay for it!  That is the NEXT THING Obama and his "plan" are going to have to explain to the American tax payer!  Thanks for the comments!


Robert, the biggest issue I SEE right now also could just be something very simple, and that is CONFUSION!   Why increase the tax benifit for 1st time buyers to 8000 from 7500...what did that do? Most people only see PART of the equation and not the whole thing!  Spelling it out, and making it simple are VERY key elements I think!  You are right, the people MAKING the payments want to know WHY they are excluded!   I dont blame them!  As a lender, one question REALTORS always asked that bothered me was "how much can they afford?".   Well, sometimes people buy with their eyes and not their minds!!!  Also, I just got off the phone with someone who interviewed me about the business...I told them, it isn't ALOT different today than 10 years ago...if you can verify your income, there is nothing wrong with the house, and you have good credit...oh and something down, you are good to go!  IN GENERAL that is what people see & hear....sadly, it is not ALWAYS true!  I am hoping that making it more clear is ONE of the answers!  As always, it falls back to education doesnt it!??

Thanks again Robert!  Your input is appreciated!


Feb 18, 2009 08:20 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Hi Valorie!
I think you make a GREAT POINT!  WE in this wonderul industry need to remember to be POSITIVE!  We can do this through educating, informing, and politcally battling!   THe news media, some bloggers on AR, as well as the average consumer are NOT following the FOUR AGREEMENTS!  One of which is not to spread rumour & inuendo!!  We need to get informative, accurate information out there, and make sure we work within what we have today, and not dwell on the past!  Thanks for your comments!


Feb 18, 2009 08:23 AM
Robert Rauf
CMG Home Loans - Toms River, NJ

Darin, you and I are on the same page.. after 20+ years of this business... What is old is new again. the same basic full doc guidlines we had from day one.. YES you CAN get a loan!  the big issue is to many people got loans and were not smart enough to ask what the payment was... and there were a few LO's that just took a loan to take a loan with out qualifying the borrower.  I never stopped qualifying.. just the method changed.. I would alwasy ask where the comfort level for a payment was, it did not matter how much we could get them, what mattered is that they were comfortable and could afford the home.  Big difference between a career LO and someone jumping in for a quick buck I guess.

Feb 19, 2009 03:11 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN


For whatever reason, my response to you, did not STICK...dog gone it!  :(

Anyway, this blog was done 2/18...it will be interesting to see, WHERE we are at in comparison the NEXT TIME the WHITE HOUSE publishes information like this!

Argghh....topsy turvy right now!!!

Thanks for commenting!  I really appreciate it!@


Apr 29, 2009 01:46 AM