What President Obama's Re-Election Means for the Housing Market and Mortgage Industry

President Obama's plan for housing is focused on keeping people in their homes by expanding access to refinancing to avoid foreclosures. Obama has called for a new version of the Home Affordable Refinance Program (HARP) that would offer HARP's benefits to homeowners with non-GSE mortgages, as well as those with jumbo mortgages. HARP was created by the Administration to help underwater borrowers refinance their mortgages. You can read more about the HARP Program.

Obama has proposed and is implementing a pilot program that would sell government-owned foreclosed homes to investors willing to keep the current occupants of these homes in them as renters. Obama also has taken credit for persuading lenders to extend from three months to one year the time that such lenders will provide mortgage forbearance to those who are unemployed and looking for work.

What About FHA?

Obama has spoken about a "need to reform and strengthen FHA by considering options such as lowering the maximum loan-to-value ratios and adjusting pricing." He supports adjusting premium pricing upward as a way to put the FHA on a more sound financial footing.

While Obama has indicated an interest in reducing the FHA's footprint over time as part of an effort to restore the private sector's role in mortgage finance, the administration is inclined to proceed cautiously in order to ensure that access to affordable mortgage financing is not compromised. While on the campaign trail, Obama proposed a refinancing plan that would allow underwater homeowners to refinance their mortgage with an FHA-insured loan.

The administration also has moved FHA servicing to special mortgage servicers who reach out earlier and more frequently to borrowers whose mortgages are insured through the FHA to assist them in avoiding foreclosure.

What Do Others Think?

The Mortgage Bankers Association (MBA), the national association representing the real estate finance industry, congratulated the President on his victory and expressed their willingness to work with him and with Congress so, as MBA put it, "continued progress can be made on the critical issues our nation continues to face."  They also used the occasion to speak about their critical interests.

MBA renewed its call for the President to appoint a federal housing policy coordinator to ensure that federal and regulatory agencies are communicating as rulemakings and policies are proposed and adopted.  The MBA also urged that when considering efforts designed to protect consumers, they do not in turn cut off the supply of mortgage credit through 'burdensome regulation and exposure to litigation."

Overall things are looking up. As housing continues to strengthen and mortgage rates remain at all-time lows, almost everyone should be able to take advantage of the programs coming their way.