Obama housing plan ‘leaves out too many Nevadans’
WASHINGTON — Sen. Harry Reid today pushed for creation of a housing reserve fund in the congressional budget, after saying President Barack Obama’s plan to rescue homeowners “will leave out too many Nevadans.”
The reserve fund would make room for Congress to pass bills giving property owners more leverage to modify troubled mortgages, or providing stronger incentives for servicers to renegotiate home loans, he said.
Reid, D-Nev., said Obama’s program to help homeowners refinance, “while very helpful in many parts of the country, will leave out too many Nevadans because their loan-to-value ratio is too high to qualify.
“Most of these Nevadans have done nothing wrong,” Reid said. “Yet now they find themselves in severe financial distress with no assistance available.”
At the same time, he said, taxpayer dollars are being spent to bail out financial institutions “that created this crisis. This is deeply unfair and wrong.”
Reid’s comments are the first time he has expressed reservations about the Obama housing strategy that was unveiled earlier this month. Experts have said the refinancing program would not be of much help in Nevada, much of California, and other hard hit parts of the country where home values have dropped by as much as 50 percent.
Earlier this month, First American CoreLogic, a real estate data service, said in a report that 58.2 percent of Nevada homeowners — the highest rate in the nation — are “upside down” on their mortgages, meaning they owe more than their property is worth.
About 28 percent of homeowners in the state owe more than 125 percent of their home’s value. Those homeowners would not qualify for the president’s program, which limits aid to borrowers whose mortgages are no more than 105 percent of their current market value.
The Obama administration has said the refinancing program would help up to 9 million homeowners who would be facing foreclosure.
Reid suggested the housing reserve fund in a letter to Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee. The panel later this week will be writing a budget blueprint for the fiscal year that begins in September.
“Expanding assistance to homeowners deserves to be a top priority,” Reid said.
Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760.