NE Ohio Foreclosure Advocates Study Obama Mortgage Plan

Wednesday, February 18, 2009
Topics: Economy, Other
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President Barack Obama's proposed mortgage plan claims to be able to help millions of Americans who owe more than their house is worth or are facing foreclosure. The White House on Tuesday held a conference call with housing advocates in northeast Ohio to discuss the plan. Cuyahoga County has long been considered one of the epicenters of the foreclosure crisis. ideastream®'s Mhari Saito reports.

President Obama’s plan proposes to help four to five million homeowners who owe more than 80 percent of their home value refinance into loans with cheaper monthly payments. He would do this by changing guidelines for what kind of loans Fannie Mae and Freddie Mac can guarantee.

Obama also proposes encouraging lenders to ok more loan modifications - changing either interest rates or lowering the principal a borrower owes on a house. And he supports legislation to allow judges in bankruptcy hearings to modify loan terms - something Richard Nemeth, Ohio chair of the National Association of Consumer Bankruptcy Attorneys, applauds.

Richard Nemeth: In bankruptcy you can change any other kind of loans, businesses can change loans, on your car, on your boat. The only one you can’t change right now is on your home and we don’t think that makes any sense anymore especially in this environment.

A similar bill to give bankruptcy judges the ability to modify loan terms failed last summer. Many in the lending industry oppose it, saying that it will end up costing borrowers more to purchase a home. 

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This feature is part of the series Mortgage Meltdown.