The White House hopes to help millions of homeowners lower their monthly mortgage bill with a $5 billion to $10 billion plan to set up a streamlined refinancing program for people who are current on their payments.
The Obama administration on Wednesday released details of the plan, which President Obama announced in last week's State of the Union address. The new proposal also includes a Homeowner Bill of Rights that would call for access to simple mortgage disclosure forms, and protection for homeowners from inappropriate foreclosures.
And the White House said the Federal Housing Finance Agency will announce a pilot program to sell foreclosed properties to buyers who would convert them into rental housing.
Obama will pitch the plan during a speech Wednesday at a community center in Falls Church, Va.
The centerpiece of the housing plan, which faces a tough road to approval in Congress, is an expansion of the administration's refinancing efforts announced last fall for loans owned by government-owned Fannie Mae and Freddie Mac.
The new proposal would establish a quick refinancing plan open to people whose mortgages are owned by banks or held by investors in mortgage-backed securities.
To be eligible, homeowners must be current on their mortgage payments for the past six months and have missed no more than one payment in the previous six months. Homeowners also would need a credit score of at least 580.
The program would not be open to jumbo loans. It only would be open to mortgages below the Federal Housing Administration's conforming loan limits, which are $271,050 in low-cost areas and $729,750 in high-priced markets, such as Southern California.
To speed approvals, lenders would only need to confirm that the homeowner has a job. Borrowers would not need to submit a new appraisal of the property or tax returns. Unemployed homeowners also would be eligible for the refinancing plan, but would require more paperwork.
The refinancing plan would help borrowers save an average of $3,000 a year by taking advantage of historically low interest rates.
But Obama wants to pay for the program through a new fee on large banks, which Congress has balked at in the past.
House Speaker John A. Boehner sounded almost incredulous on Wednesday that the administration was proposing another housing program, saying "none" of the White House proposals have worked and home prices needed to settle on their own.
"One more time? One more time?" Boehner said. "How many times have we done this? ... I don’t know why anyone would think this next program would work."