February 19th, 2010
02:24 PM ET
13 years ago

Obama unveils new housing aid program

[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2010/images/02/19/art.boreid0219.gi.jpg caption=" President Obama's campaign-style event also served as a rally for Senate Majority Leader Harry Reid who is facing an extremely tough re-election battle this year."]
Henderson, Nevada (CNN) - President Barack Obama took his economic recovery agenda on the road Friday, unveiling a new housing assistance program at a boisterous town hall forum.

The campaign-style event also served as a rally for Senate Majority Leader Harry Reid, D-Nevada, who is facing an extremely tough re-election battle this year.

Reid "is a fighter," Obama declared in a packed high school gym. He "has never stopped fighting ... for middle class families."

The president "has a superb mind," Reid said, returning the favor. "I say no president, not even the great Franklin Roosevelt, had the problems this man has."

Obama, who carried historically Republican-leaning Nevada in 2008, also was scheduled to appear with Reid later Friday at an event with the Las Vegas Chamber of Commerce.

Obama used his trip to Nevada, which has been hit hard by home foreclosures, to lay out a $1.5 billion program to help borrowers in the five states most affected by the housing crisis.

The initiative calls for pumping money into state housing agencies in California, Arizona, Nevada, Florida and Michigan to fund programs to prevent foreclosure for people who are unemployed or who owe more than their homes are worth.

Also, the agencies would be able to assist homeowners having trouble securing loan modifications because of second liens, as well as promote affordable housing opportunities.

The initiative will be funded with money from the TARP bank bailout.

The money will be allocated based on a formula that takes into account home price declines and unemployment. The agencies' programs must be approved by the Treasury Department.

Obama's move is the administration's latest attempt to fix its signature foreclosure-prevention effort, the Home Affordable Modification Program, which has been widely panned for not doing enough.

The year-old initiative, which lowers qualified borrowers' monthly payments to no more than 31 percent of pre-tax income, has placed more than a million people in trial modifications. But it has given lasting help to only 116,000 homeowners, mainly by lowering their interest rates.

Consumer advocates and housing experts for months have called on Obama to expand the program to help the jobless and those suffering steep declines in their home value, two sectors that have received relatively little assistance from the modification effort. Administration officials repeated as recently as Wednesday that they were working on the problem, but that it was a complex issue.

Also, many homeowners with second liens have had difficulty getting into the loan modification program. In April the administration had announced a program that provides incentives for these lenders to work with borrowers, but only Bank of America has signed up so far, and it did so only last month.

A senior Obama official cautioned that the new program is just another tool in the White House arsenal, not a full solution to the housing woes facing the unemployed and people with "underwater" mortgages.

Friday's announcement shifts the burden of coming up with solutions to the housing agencies - organizations that are state-chartered but mostly operate independently.

Traditionally, these groups focus on affordable housing, providing assistance to first-time homebuyers and those with low incomes. Nationwide, they have provided mortgages to more than 2.6 million first-time purchasers and have financed 2.9 million low- and moderate-income apartments, according to the National Council of State Housing Agencies.

The majority of underwater mortgages are heavily concentrated in five states being targeted by Obama's proposal: Nevada, where 65 percent of mortgages meet the definition; Arizona, at 48 percent; Florida, at 45 percent; Michigan, at 37 percent; and California, at 35 percent, according to the research firm First American CoreLogic.

These states also have among the highest unemployment levels as well, with Michigan at 14.6 percent, Nevada at 13 percent, California at 12.4 percent, Florida at 11.8 percent.

Arizona has a jobless rate of 9.1 percent, which is better than the national 9.7 percent rate for January, according to the Bureau of Labor Statistics.

–CNN's Tami Luhby contributed to this report

Filed under: Harry Reid • President Obama
soundoff (44 Responses)
  1. Hugo

    The president "has a superb mind," Reid said, returning the favor.

    Let's put it in a jar and call it Abbey Normal!

    February 19, 2010 04:15 pm at 4:15 pm |
  2. Under water in AZ

    Another program, here we go again. And I am one of those underwater. However, I bought responsibly in 2004, put down over 20%, didn't buy outside my budget, and now my house value has gone down so much that I have lost my downpayment and I am still paying off a 155K mort for a house that is valued at 110K.....won't see anyone bailing me out........Have to stick it out for better times or just walk away.......and become a part of the problem........thanks to all of the government officials that got us into this mess!

    February 19, 2010 04:18 pm at 4:18 pm |
  3. tainopower

    $1.5 Billion in Housing Assistance in Vegas? Will ask the governor from my state to get mad at obama to see if we can get pay off to. And get a sweet deal to. This president thinks everything gets fix whit money specially if is not yours. STOP the out of control spending and remove this president before is to late.

    February 19, 2010 04:19 pm at 4:19 pm |
  4. Jamey Columbus

    I would rather see Obama buy votes by putting people to work building highspeed rail lines, more efficient factories, clean energy plants... nope instead we will pay for mortgages who cares about jobs.... as long as the govt will keep the status quo..

    February 19, 2010 04:20 pm at 4:20 pm |
  5. perryrants

    is money goin gto the states that dems need to win?

    i'm underwater and can't get crap! and i live 20 miles north of obama.

    February 19, 2010 04:23 pm at 4:23 pm |
  6. Monkey wrench

    Sniffit-The road to hell (or economic ruin) is paved and created by liberal government's good intentions. I wonder if you researched those that are in trouble with their mortgages are those that qualified (or didn't qualify) for the Fannie and Freddie government backed home loans, refinanced to the hilt to buy a bunch of widgetts and were otherwise not personally responsible for the financial well being. I've got three kids, been laid off for two years and am still strong financially because I was frugal, responsible and honest. I DO NOT want my tax money going to bail out anyone that doesn't deserve help, if they can't afford their home, rent an apartment. This Administration is a menace to society and I for one am counting the days until the next election, with that said the Conservatives better pull their heads out of the butts and walk the walk or we are all in for a truly hard row to hoe.

    February 19, 2010 04:23 pm at 4:23 pm |
  7. Franky, Land of Lincoln

    Isn't that harry reid right there? You know, the one who is facing a tough re-election? Ah yes, I believe it is. And did he just compared alternatives to the one and only, FDR?? What a loser and for the record, FDR didn't just throw money in the fire and see how much gets burn and used up, he actually checked first if the money can be burned as accurate as he planned, see the difference? 🙂

    Obama is a moron, he ain't like a james K Polk who had goals in his first year and for gopodness sake, implement them!! isn't that what our President hopes to accomplish? be a good first year president? Well, good luck to him and to his little brain of his.

    February 19, 2010 04:29 pm at 4:29 pm |
  8. Hi I'm TriG, and my mommy scares me :-(


    "That might be because people don't understand his smart thinking and smart actions, right? What a comedy?"

    Well, I can tell you're smart. "What a comedy?"


    February 19, 2010 04:32 pm at 4:32 pm |
  9. Anne - VA

    I just think it is so immature for [some of you] to BLAME this BS on President Obama...tell you what...why don't YOU get in there and FIX this mess that George W. Bush left this country in.

    It's obvious that GWB didn't give a toot about this country...I mean give me a break people. WAKE UP and look at it for what it is.

    Obama had not a single thing to do with it...AND to make money we all know you have to SPEND money...

    So please....get over yourselves...you have a BLACK President. These sort of responses makes my skin boil....


    February 19, 2010 04:33 pm at 4:33 pm |
  10. ster

    This is the most tone-deaf President ever!

    America says... Stop Spending!
    What does he do?

    Go to Nevada to spend $1.5Billion to BUY A SENATE SEAT.

    Just unbelieveable. November 2010 and November 2012 can't come fast enough. We have got to stop these idiots from bankrupting us. And yes, I thought Bushie was bad.... Obama is just three times as bad!

    February 19, 2010 04:34 pm at 4:34 pm |
  11. indy

    Are we helping people continue to own their homes or putting off the inevitible? Some people are in homes they cannot afford. They should not be given help to continue living in them. They should be getting help finding a home they can afford with what they make. Perhaps working on a jobs bill to get people to work would be more beneficial. I don't just mean the big construction jobs either. Bottom line in where the President announced this aid however is that he wants to help Senator Reid. I hope he's too late on that front!

    February 19, 2010 04:36 pm at 4:36 pm |
  12. BeverlyNC

    Once again President Obama stands up for the People. He knows what the issues are facing working America and he is doing everything he can to help the People.

    Republicans are out partying, clueless to the rabble living beneath their elitist white class, and only showing up when it is time to vote NO again on legislation they don't even read or understand.

    Republicans have done NOTHING to help restore our country and that's their plan for the future too. All they can do is lie, criticize, and embrace lunatics who are terrified of an intelligent Black President.

    We should take away Republicans government-run healthcare and government-provided pensions and then maybe they might pay attention to how real Americans have to live when they have to try to get insurance and save for retirement with a 401K. These jerks are clueless!

    February 19, 2010 04:41 pm at 4:41 pm |
  13. Hammerer

    Obama is looking for the attention that he never received as a child.
    He will do anything to fill the need for attention. Even drive America to ruin.

    February 19, 2010 04:41 pm at 4:41 pm |
  14. Biased

    At least Obama came out from behind Reid's closed doors when he engages in a buyoff. He is blatant about how he uses taxpayer funded money as democratic campaign funds to buy Nevada voters in order to get Reid re-elected. The money doesn't have to be repaid, and his speech was more campaign stump than government program introduction. Oh well, I guess Obama will be unrolling future programs at taxpayer expense to whichever state has democrats who are in trouble of being ousted. I guess if he hasn't already busted the treasury, he has from now in the middle of February to the elections in the fall to do so.

    February 19, 2010 04:42 pm at 4:42 pm |
  15. Tom

    To little to late!!!!!!!!!!!!!!!!!!!!!!!!!!!! Where has this help been for the last year and a half????????????????????? While you were off trying to get the Olympics for your wife's hometown, living it up in fancy hotels with Oprah and your entourage, we were here in Las Vegas starving and jobless. Thanks for nothing!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    February 19, 2010 04:45 pm at 4:45 pm |
  16. Paul Ernest Show

    Thats what needed

    February 19, 2010 04:47 pm at 4:47 pm |
  17. Bedtime for Obonzo

    "I say no president, not even the great Franklin Roosevelt, had the problems this man has."

    Let's see - FDR had the Great Depression and a world war. Makes you wonder if Sen. Reid reads.

    February 19, 2010 04:47 pm at 4:47 pm |
  18. No More Incumbents

    Let me guess, he's giving away money that is not his, and pandering to a portion of the populace that put him in office. See, I didn't need to bother reading the article!

    February 19, 2010 04:56 pm at 4:56 pm |
  19. Hugo

    Okay, let's consider a little further thought on what happens in a foreclosure for you that still don't get it. The bank kicks you out and keeps whatever equity you have in the home, they then file with their mortgage insurance company that is required to be carried by the owner by law unless they have 20% or greater invested. The insurance company then pays off the remaining balance difference and the bank short sells the home keeping any gain over what was paid by insurance on the note and what the sales price turns out to be. Now, it seems to me the insurance company is the one left holding the bag, and who could that primary mortgage insurance company be you in the US you ask? AIG, paying off the foreclosures with YOUR and MINE tax dollars!

    February 19, 2010 05:01 pm at 5:01 pm |
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