U.S. President Barack Obama pitched some new mortgage and lending plans to the public in his economic speech Tuesday at Dobson High School in Mesa, Arizona. In his speech he sketched out various plans to overhaul the lending market and asserted on the importance of private lending without ruling out government involvement in the sector.
"I believe that our housing system should operate where there's a limited government role and private lending should be the backbone of the housing market," Obama said in the speech.
According to MSN, Obama's new plan has three main elements: to reduce mortgage rates; to help homeowners refinance their mortgages and to stabilize the residential real estate market through a $75 billion initiative that aims at relieving homeowners who are at-risk for up to $4 million in loans. However, the central element of the plan involves allowing easy access of credit to potential homeowners and helping them afford a house through a smooth payback plan.
"Today, our housing market is healing. Now we have to build on this progress. We give to more hardworking Americans the chance to buy their first home. We have to help more responsible homeowners refinance their mortgage. And above all, we have to turn the page on the bubble-and-bust mentality that created this mess and build a housing system that's durable and fair and rewards responsibility for generations to come," he added in the speech.
Check out a video of his speech, below:
However, the plans sometimes contradict one another.
Though the President railed against Fannie Mae and Freddie Mac, the two lending giants that were bailed out by the government during the housing bubble burst of 2007-08, and rooted for private lending taking center stage, he did not rule out government involvement in the lending market. He also urged lenders to "tamp down risk taking" but encouraged them to give loans to credit worthy customers. Of late, after the real estate bust, lenders have shied away from aggressive lending leaving the public with no other choice but government backed mortgages, reports The Wall Street Journal.
Moreover, Fannie and Freddie's future is also suspended in a vacuum. Though the pace at which decisions about the two entities are being made is slow, the government is diligently working on various proposals to determine a new future for the now-profitable lending giants.
The real estate sector of the country is a major economic contributor. The administration has decided to repair the financial market and address issues regarding the sector seriously. On Wednesday, Obama will be participating in a roundtable with Spencer Rascoff, the CEO of property website 'Zillow' to discuss the market and will also answer questions from the public coming from social media. One can post questions via YouTube, Instagram, Vine Facebook or Twitter. Want Obama answering your question? Check out how, here.
