Obama offers wider plan for mortgage help

February 2, 2012 at 12:00a.m.

Los Angeles Times

WASHINGTON

Distancing himself from Republicans on housing issues, President Barack Obama pitched a $5 billion to $10 billion plan to help a key segment of struggling homeowners — those still making monthly payments but on underwater mortgages.

Obama proposed Wednesday to help about 3.5 million people with good credit who are unable to refinance at historically low rates because their homes are worth less than their mortgages.

He argued that those homeowners — and the country — couldn’t afford to let the housing market bottom out, as many Republicans, including presidential candidate Mitt Romney, have advocated.

“This plan ... will not help the neighbors down the street who bought a house they couldn’t afford, and then walked away and left a foreclosed home behind,” Obama said. “It’s not designed for those who’ve acted irresponsibly, but it can help those who’ve acted responsibly.”

His administration took steps last fall to help as many as 11 million underwater homeowners whose loans were backed or owned by Fannie Mae, Freddie Mac or the Federal Housing Administration. Now Obama wants to expand that program to the remaining underwater homeowners, whose loans are owned by banks or investors.

But the refinancing plan is strongly opposed by many congressional Republicans and faces an uphill climb in an election year. They contended that the administration’s previous housing plans have been unsuccessful and that the market needs to settle on its own.