Obama unveils housing plan aimed at helping veterans

By Karoun Demirjian

Tuesday, March 6, 2012 | 6:25 p.m.

Every few weeks, President Barack Obama has unveiled another piece of his executive strategy to address the protracted home mortgage crisis.

This week, his announcement focused on the Federal Housing Administration and veterans — two categories of mortgage holders who have been at particularly high risk of foreclosure, and to whom Obama has pledged help in the past.

“Today we’re taking it a step further,” Obama said Tuesday.

The president proposed cutting the refinancing fees for FHA loans that originated before June 1, 2009, by half, a reduction he estimated would be worth about $1,000 per year to the 2 to 3 million families the administration estimates would be eligible.

It’s an extension of an initiative he unveiled last month. Then, the president announced an initiative to encourage homeowners to refinance their mortgages at historically low interest rates. Millions of FHA loan holders total are paying above a 5 percent mortgage rate, while current mortgage rates are well below 4 percent.

But as always, there are a few potential pitfalls for Nevadans.

The offers — both last month’s and today’s — are only available to homeowners in good standing. “If you’ve been on time on your payments, if you’ve done the right thing, if you’ve acted responsibly, you should have a chance to save that money on your home,” Obama said Tuesday.

But administration officials have admitted that these new plans aren’t sweeping many Nevadans along for the ride though they say there’s plenty of help out there for the already foreclosure afflicted.

“In regions like Las Vegas, where we have seen some of the most dramatic declines in housing values, you see majorities of people who are actually underwater on their mortgages,” Brian Deese, deputy director of the White House economic council, told the Sun last month when Obama was first announcing his FHA-anchored refinancing plan. “We have existing programs in place that give borrowers who have gotten themselves into a situation where they’ve fallen behind the opportunity to help modify their mortgages, put it on a concrete basis ... we continue to try to work to improve and expand the modification programs that we have for borrowers who get themselves into trouble and fall behind.”

But while the administration is sticking to the homeowner in good stead for the FHA fee reductions, they are being aggressive about working to secure restitution payments for veterans who have unduly gone through foreclosure.

“It is unconscionable that members of our armed forces and their families have been some of those who have been most susceptible to losing their homes due to the actions of unscrupulous banks and mortgage lenders,” Obama said Tuesday. “If you are a member of the armed forces whose home was wrongfully foreclosed, you will be substantially compensated for what the banks did to you and your family.”

The Obama plan is to conduct a review of every military family that went through a foreclosure since 2006, and award those who were foreclosed upon in error a hefty settlement: at minimum, the sum total of the equity they lost, plus the interest they would have accrued, plus $116,785.

The predominant cause of bad foreclosures was banks operating without a court order, Housing and Urban Development Secretary Shaun Donovan said Tuesday.

Obama’s plan also proposes compensating soldiers who were forced to sell their homes at undermarket rates because they had to change their station in the midst of the recession.

Last year, Nevada Rep. Joe Heck, a Republican, pushed the House Armed Services Committee to demand a count of how many military members were swallowing losses because they were forced to shed real estate in order to move for a new military assignment. The government program only covers troops that acquired their property before July 2006 — Heck wanted to see the date extended to cover at least the period until the housing bubble fully burst in 2008.

The president’s plan also plans to compensate service members who they deem were “wrongfully charged higher interest rates” by being denied the right to refinance. Those awards will be worth four times the amount of the overcharge for any member of the service paying a mortgage rate of higher than 6 percent.