::View a slideshow of Obama's speech here::
President Barack Obama unveiled a plan Wednesday morning that he said will reduce foreclosures and save the nation’s floundering housing market, during a speech at Dobson High School in Mesa.
“In Phoenix and in surrounding suburbs, the American dream is being tested by a home-mortgage crisis that not only threatens the stability of our economy, but the stability of our families and neighborhoods,” Obama said.
President Obama said his plan, known as the Homeowner Affordability and Stability Plan, will allow millions of families to refinance their loans and give lenders incentives to modify the terms of current mortgages, making payments more affordable for homeowners.
The plan will also bring mortgage payments for qualified homeowners down to 31 percent of the borrower’s income through modifications.
The president said the measures will, over the next year, prevent between 7 million and 9 million foreclosures, which he said reduces the value of surrounding property and triggers a chain reaction.
“If we act boldly and swiftly to arrest this downward spiral, then every American can benefit,” Obama said.
The price of the plan is about $75 billion, according to a White House press release.
“There will be a cost associated with this plan,” Obama said. “But by making these investments in foreclosure prevention today, we will save ourselves the cost of foreclosures tomorrow.”
Obama spoke to an exclusive crowd of about 400 people, many of whom were state and local politicians. Gov. Jan Brewer was among those in attendance. Brewer was hesitant to comment on the plan, but said as a general rule, she does not think it is good policy for the federal government to intervene in a mortgage crisis.
“The government usually steps in, and when they do, it creates another problem,” Brewer said. “However, it is the law of the land, and we will do what we can to implement it.”
State Rep. Daniel Patterson, D-Tucson, applauded the president’s plan, and said Democrats in the Legislature would work to implement similar reforms on a state level.
“Arizona is ground zero for the real-estate bust and foreclosure problems,” Patterson said. “The combination of what the president is proposing and my bill for foreclosure relief, House Bill 2601, should work together [to help Arizona homeowners].”
Patterson said the bill would provide a “time-out” on foreclosures of at least 60 days, and up to a year in certain cases. Provisions in the bill would encourage both lenders and homeowners to re negotiate mortgage terms to make payments more manageable, Patterson said.
Outside, about 600 people gathered on the north lawn of the high school to protest President Obama’s policies, which they said are shortsighted and reward irresponsible borrowers.
“We’re just rewarding bad behavior,” said political science senior and College Republicans chairman Matt Wharton. “It’s giving money to people who are obviously irresponsible with their money.”
Reach the reporter at derek.quizon@asu.edu.
