Obama Expected to Unveil Plan to Revive Housing

The Obama administration is expected to announce a new mortgage relief program next week to help struggling home owners stay in their home and reduce the number of foreclosures, Reuters reports.

While the exact details of the proposal are still unknown, analysts are speculating that President Barack Obama is likely to announce a plan that would help more borrowers to refinance loans, allowing them to lower their monthly payments and ward off possible foreclosure.

The refinancing plan will reportedly apply to loans backed by government-owned Fannie Mae and Freddie Mac or the Federal Housing Administration, allowing more home owners who have been unable to refinance due to poor credit, owing too much above their home’s current value, or unemployment, to take advantage of current low interest rates.

Other lawmakers who have pushed for such a move have argued that by lowering home owners’ monthly payments, it would free up cash for other spending, which will help stimulate the overall economy.
Many home buyers have been reluctant in recent weeks to move forward on home purchases due to fears that the country could be heading to a double-dip recession, but new data suggests they have nothing to fear.

The job picture seems to be improving, according to new economic data. For example, a report from ADP, a payroll processing company, showed that private employers had added 91,000 new jobs in August--after expanding by 114,000 in July. Also, unemployment rates were lower in July than a year earlier in 257 of the 372 metro areas, according to the U.S. Bureau of Labor Statistics. The government’s labor market report, coming on Friday, also is expected to show a modest increase in employment.

What’s more, the number of planned layoffs at companies, which has been rising for the last three months, curtailed in August.

“The labor market is soft but not falling apart,” says Joel L. Naroff, chief economist at Naroff Economic Advisors in Holland, Pa. “The economy is not on the verge of a recession.”

Also, economic data pointed to a strong rebound in demand for manufactured goods in July, particularly for cars. Orders for motor vehicles posted their largest gain since 2003.

Source: “White House Could Unveil Mortgage Plan Next Week,” Reuters (Aug. 31, 2011)