According to the Washington Post on Monday, President Barack Obama is considering a series of new executive actions aimed at working around a recalcitrant Congress, including policies that could allow struggling homeowners to refinance their mortgages.
Obama is weighing whether to use his executive authority to give more of the country’s nearly 11 million struggling homeowners a chance to refinance the real estate property at today’s ultra-low interest rates, according to the Treasury Department and others in talks with the administration on the issue.
Obama already has used his executive powers to make refinancing easier for people with loans backed by government-financed mortgage companies Fannie Mae and Freddie Mac. But the new plan could extend the opportunity to people who are underwater on their privately backed mortgages, which have not been eligible for the same relief.
The plan, if adopted, would likely be aimed at owners who have otherwise kept up with their home mortgage payments but have been unable to refinance because the loan against their home exceeds its depressed value. Many Republicans in Congress have balked at the idea amid concerns over the cost to taxpayers.
Under the slogan “We Can’t Wait,” Obama took actions beginning in late 2011 to boost the housing market, lower payments on student loans and delay deportation of young illegal immigrants. He also installed key officials in regulatory agencies without congressional approval, producing loud complaints from Republicans.
Michael A. Stegman, a senior Treasury Department official, said late last month that the administration would “consider non-legislative means at our disposal to help responsible . . .homeowners access these low rates.” But he added, “the legislative route would be preferable.”
In Case You Missed It: Feds Sue S&P, Alleging Fraud
In July 2007, the nation’s largest ratings agency, Standard & Poor’s was considering whether to downgrade a range of mortgage bonds that had earlier gotten the company’s seal of approval.
Pressure was increasing inside the company to reveal the toxic nature of these securities. But there was a problem, according to an email exchange between an S&P analyst and an investment banker.
“Leadership was concerned of p*ssing off too many clients,” wrote the S&P analyst. The response from the investment banker: “We pay you to rate our deals, and the better the rating the more money we make?!?! Whats up with that? How are you possibly supposed to be impartial????”
Government lawyers said S&P’s actions in 2007 during the run-up to the financial crisis make it liable for at least $5 billion in damages, making the case one of the highest-profile attempts by the federal government to prosecute those responsible for the country’s economic meltdown four years ago.
S&P released a statement on the same day last week, saying the lawsuits were “meritless.”
“Although we deeply regret that these 2007 [collateralized debt obligation] ratings did not perform as expected, 20/20 hindsight is no basis to take legal action against the good-faith opinions of professionals,” said S&P, which is owned by McGraw-Hill.
This is filed under National Markets.