Washington (CNN) - Housing and Urban Development Secretary Shaun Donovan revealed to CNN Friday that the Obama administration plans in coming weeks to launch two initiatives to deal with the crumbling housing market, and he left the door open to also reviving the expired $8,000 tax credit for first-time home buyers that had been propping up the industry.
"We're going to be rolling out an FHA refinancing effort to help borrowers who are under water in their homes get above water," Donovan said in an exclusive interview taped for CNN's "State of the Union with Candy Crowley" on Sunday. "And second, we're launching an emergency homeowners' loan program for unemployed borrowers to be able to stay in their homes."
The swift action being pushed by President Obama's housing chief come in response to awful news in the housing industry this week, starting with Tuesday's revelation that existing home sales hit their lowest level in over a decade, declining by over 27 percent during the month.
Watch key parts of Donovan's interview with Ed Henry, after the jump:
Then on Wednesday, new home sales took a beating, falling to its lowest point since 1963, despite the fact that Donovan claimed in May that the housing market "has begun to turn the corner" and then said earlier this month that the market is in "significantly better shape than anyone predicted" last year.
"In July, we all expected home sales numbers to go down as a result of the end of the tax credit, but they were clearly worse than expected," Donovan acknowledged on Friday to CNN Senior White House Correspondent Ed Henry, filling in for Candy Crowley this Sunday.
Donovan was referring to the recent expiration of the tax credit for first-time home buyers, which analysts believe helped spark the sharp decline in home sales in July.
When pressed on whether the White House will now push for an extension of the tax credit, Donovan suggested the credit will not come back in the short-term but he left the door open to bringing it back down the road if the industry does not improve.
"I think it's too early to say, after one month of numbers, whether the tax credit will be revived or not," Donovan told CNN. "All I can tell you is that we are watching very carefully. I talked earlier about new tools that we will launch in the coming week, and we are going to be focused on where the housing market is moving going forward. And we're going to do everything we can to make sure that this market stabilizes and recovers."
The administration leaving the door open to the possibility of extending the popular tax credit is new, though some of the other initiatives mentioned by Donovan have been pushed by the administration previously. Back in March, the Treasury department announced adjustments to Federal Housing Administration programs in order to help struggling homeowners as part of the existing Troubled Asset Relief Program (TARP).
There was $3 billion in emergency loans for the unemployed included in the recently passed Wall Street Regulatory Reform Bill. Though that money has gotten little attention so far and likely will be doled out in coming weeks as Donovan suggested.
Donovan was speaking from New Orleans, where he will be when the President tours part of the city and delivers a speech at Xavier University on Sunday to mark the fifth anniversary of Hurricane Katrina. He said that while a lot of progress has been made in rebuilding the city, there is still a lot of work to be done.
"This is the place - New Orleans and the Gulf Coast - where I think the American people witnessed a real loss of faith in their federal government," Donovan said. "I've been really moved by the spirit of the people in New Orleans and the Gulf, and their rebuilding and the optimism and progress that I've seen. More than 90 percent of the population is back in the New Orleans area, and there is still much ahead of us."
(Updated at 2:00 p.m. ET Sunday)
What crumbling housing market? This is just a market adjustment led by free market forces. Housing is currently overvalued. Let the prices continue to drop until the laws of economics stabilize them?
Every free market Conservative opposes any effort to prop up the cost of housing.
Lets keep giving away tax payer money. All it did the first time was create a temporary blip. We need to get jobs moving in the private sector. Not the government! This president is the worst of all time! Things will not recover until all the socialist damage is undone!
In my neighborhood nearly 10 houses in foreclosures with in half mile radius its bother me. I don’t know my investment pay me back
Thanks CNN discussing the real problem
Are we going to allow more people who can't afford houses to buy them? I see another bailout coming at taxpayers expense again.
Ever notice how whenever there is a problem with anything, the Liberal solution is to throw more taxpayer money at it? For all you bleeding-heart Democrats, Please take the time to research the coming increases in Obama's 2011 IRS Tax Code. The tentacles of Socialism are in plain view and EVERY working American is clearly in his cross-hairs and NOT only those impacted by the Bush tax cuts from earlier this decade.
Class warfare is alive and well! Those working are expected to pay for those that for whatever reason, do not! Entitlements bring Democrat votes, it's a simple as that and why it is the Liberal credo and killing the America we ALL once knew!
It's all a joke if we don't unwind Fannie and Freddie by a careful attrition of their portfolios, then return the mortgage market to the private sector. The opioid American Dream of homeownership is a vast criminal conspiracy of bankers, builders and realtors who entice people who can't afford to own real estate into buying more than they can afford under any reasonable standard of creditworthiness. Better they should rent and save money for their children's education and training.
I just betcha this is going those of us who actually work for a living and pay taxes more money. Everything this administration does cost working Americans more money and benefits the drug using, non workers who support this incompetent, inept, corrupt, union toady president the unions stole the election for.
We need a visionary government – not a reactionary one!!!
I see people are talking about socialist Helping house market not socialism it will protect hard working Americans investment
I work two jobs never been in government help. I never pay late fee I never paid interest on my credit card every thing paid on time my house value down by 20 % because of foreclosures
Housing market need help only housing industry can save our jobs don’t want to help housing market
Republicans Bring our troops back Bring our jobs back
And what is this going to do for unemployment??? If people can't afford to own a house, then this will just lead to more foreclosures. Do these people not have a single clue??? I gave them a little more credit. I guess I was wrong!
Allowing people to refinance at lower rates is NOT an affront to "free markets." If you owe more than your home is worth through no fault of your own (ie, cue to Bush's failed economic policies and greedy corporations), then a refi into a lower interest rate merely allows homeowners to inject more money into the economy with the money that's freed up. It's rather telling that when the middle class is allowed to have more money to spend you rightie nutjobs flip out, but ya'll are right on board with tax cuts for the wealthy even though those are PROVEN not to stimulate the economy as well as increasing poor and middle class spending.
How can a system self correct if government continually prevents failure to occur? I would say that if someone presently in foreclosure was a solid good responsible citizen that had and good work history, paid taxes, did not mortgage to the hilt to buy toys and was in dire straights due to losing their job, then set up a program to help them. If they were in a house they couldn't afford, financially irresponsible, where on other entitlement programs, then let them eat dirt!
Indymac Mortgage has been playing games with me since Apr of 09 and as of this date all they say is we are reviewing your application. I send updated paperwork every month. Why should they want to help me out. I am paying 7.5 interest only on a loan they have provided me with. My house is now only worth 120,000 and I owe 312.000 with a second included in this. The only hope I was given by them was that you need to do a short sale if you cannot afford the house. I can tell you this if nothing is done and I end up walking away the house will be totally trashed inside because I have put 30,000 into the house myself. I will make sure they get a real low price when they do sell it. I never asked for the mortgage meltdown as so many American are suffering however no one is bailing us out like the government baled the banks out.
So again they will give interest free loans to unemployed people that cannot to repay this new loan, in homes they cannot afford and are valued at less than they floated a loan for. Brother, how can any liberal not see this is stupid. Two years so far for continued unemployment payments and alot of the unemployed work for cash so they can continued to draw the unemployment check.
If they are going to offer refinancing for a select few it will do absolutely nothing as did the last plan. Offer low refinacing for all those who own a home and watch how many take advantage and then see how much more they will spend to enhance there living environment. that is what will create a boom for the economy.
push is to extend the tax credit...okay...no wars...no wars...no wars...like thugs like GOP strategy...
This means there's another downturn in the housing market is coming.Can't these people leave the free market system alone?
Just keep on giving , next on his list , is Fort Knox . Needs the Gold for his New MOSQUE . To show Victory of the Terrorist. What a leader for distruction.
This is your big Change at work . WRIGHT. Can not accout for 46,000 Black Farmers. Where has he got them stashed. Or did that pay out go to his terrorist buddies ?
Time for more fly abouts an do nothing but lie some more. Best was when he stated his father fought in world war 2 . . He was only 6 yrs old. Right King Obama .
We have gone through halk a dozen tried and failed efforts by the Government to force the issue of loan modifications to avoid all of these foreclosures. Until the Government is sincere about solving this problem and the Banks find a way that is beneficial for them to participate in this, the problem will not go away.
The Government is concerned about new home sales in an economic environment that is not able to support the loan psocess and existing homes at defated values can't find buyers. We need to find thye economic will ways and means to get serious about loan modifications with sincere participation by the banking community. Absorb the differential losses and move on.
Just another clueless, I mean CLUELESS cabinet appointee by this administration.
More BS handouts for deadbeats!!! Obummie the people that pay taxes will be at the polls this November. You better get your busloads of deadbeats to the polls if you want to keep any seats in congress.
MORE DEFICIET . . . . the democrats continue to try to buy votes.
Apparently Sec. Donovan didn't learn his lesson the first time. The tax credit that was offered has merely stolen demand from future months of purchasing. If Donovan has done anything, he has ASSURED that housing will CRASH in a way that is WORSE than if he had done nothing. The brief spike back up to levels of sales has now assured that all those houses that would have sold in the next few months leveling out the decline have been packed into 3 months in the spring, causing even LARGER future declines.
The more they do NOW, the more pain the American People will have to suffer when the market attempts to correct itself.
Democrats just don't get it – the government has no business tinkering with a market economy. The easy-money mortgages are what caused the Great Recession in the first place. The first-time homebuyer credit only creates a temporary lift, then a crash! Let capitalism work – and our economy would repair itself.
Wake up people! Put a stop to the Socialist agenda being shoved down our throats by Obama and the Democrats. In November, vote American, vote Republican.
This is the humpteenth bailout of people being foreclosed on for buying homes they could not afford. None of them have worked! STOP!