Obama uses executive power -- and the bully pulpit

Declaring that he won’t wait any longer for Congress to act, President Obama said Monday he would use his executive power to help struggling homeowners refinance their loans and take advantage of historically low interest rates.

Obama announced details of the plan in a modest subdivision of stucco houses in a city that has been walloped by foreclosures and falling home values.

“I’m here to say to all of you and to the people of Nevada and Las Vegas that we can’t wait for an increasingly dysfunctional Congress to do its job,” Obama said. “Where they won’t act, I will.”

Congress has blocked Obama’s attempt to pass a nearly half-billion-dollar jobs package. In the face of congressional opposition, Obama said he would govern more through executive orders that bypass Congress.

“Until they act, until they do what they need to do, we’re going to act on our own,” he said. “Because we can’t wait for Congress to help our families and our economy.”

Obama spoke outside the home of Jose and Lissette Bonilla. Neighbors living in the beige-colored houses gawked at the scene, pressing against metal barricades.

Before the event, Obama sat at a dining room table with the couple, fist propped against chin, listening as they told of their troubles getting a suitable home for their three children.

The Bonilla home was renovated through a $50,000 program paid with federal stimulus funds.

“Mr. President, thanks to you we have a wonderful home,” Lissette Bonilla told him.

In his speech, Obama said the new program would help people refinance by reducing closing costs, increasing competition among lenders, and relaxing rules that punish people whose home values dropped sharply.

“You take these things together, this will help a lot more homeowners refinance at lower rates,” Obama said.

He added that he would do “everything in my power to help stabilize the housing market.”

The changes were first announced by the independent Federal Housing Finance Agency, which has been working with the White House to revamp a 2½-year-old program that has fallen well short of expectations for helping struggling homeowners and reviving a still-moribund housing market.

The Home Affordable Refinance Program is for homeowners with mortgages owned or backed by Fannie Mae and Freddie Mac. Under the new guidelines, which will be issued to lenders Nov. 15, borrowers who refinance under this program would see certain fees reduced or eliminated. The agency is lifting a ceiling that barred borrowers who owed more than 125% of the value of their homes.

The program’s revamping is part of stepped-up efforts to aid the battered housing market, which increasingly is seen as an obstacle to the broader economy and the fragile recovery. Obama announced in early September that he would help more “responsible” home borrowers to refinance.

Edward J. DeMarco, acting director of the Federal Housing Finance Agency, said it was difficult to say how many more borrowers would refinance under the new rules, which will be issued Nov. 15. He told reporters on a conference call that it would depend in part on interest rates and the individual circumstances of borrowers.

Through the end of August, almost 900,000 homeowners with loans owned or backed by Fannie or Freddie have refinanced through the program. The administration, however, had hoped the program would help several million borrowers.

Even with the new rules, only borrowers with mortgages taken on by Fannie and Freddie on or before May 31, 2009, can qualify. Their loan amounts must top 80% of the current market value of their homes. And they must be current on their payments, with no late payment in the last six months and no more than one late payment in the last 12 months.

That means the program provides no help for the 3.5 million or so homeowners who are seriously delinquent on their loans or in default.