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President Obama Promises Homeowners Relief to the Tune of $3,000/Year

It’s time to “…give those banks that were rescued by taxpayers a chance to repay a deficit of trust.”

If you didn’t watch Obama’s 2012 State of the Union Address it was powerful. By the end of the address, Obama had the majority of the Republican party giving a standing ovation—I think that says a lot. It even had this hybrid Democrat/Republican feeling like I should be paying more taxes…ouch.

As it pertains to the real estate industry here in Hawaii, I’d like to share an excerpt from Obama speaking on the housing crisis:

“…millions of innocent Americans who’ve seen their home values decline. And while government can’t fix the problem on its own, responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief.

And that’s why I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low rates. No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won’t add to the deficit and will give those banks that were rescued by taxpayers a chance to repay a deficit of trust.”

Decoding what Obama is Saying?

  • Does this mean the cost of the refi will fall on the banks, not the government or the homeowners?
  • How much easier will this make it for homeowners to refinance?

If you have any insight, or thoughts, please comment below. Personally, I agree with Obama that the banks owe the taxpayers for bailing them out—and the time to repay the favor is now.

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annie mendoza

January 25, 2012

Mahalo, Justin! I’m excited to learn of the details and see what actions Congress will take!

annie mendoza

January 25, 2012

Mahalo, Justin! I’m excited to learn of the details and see what actions Congress will take!

Justin - Head of Innovation

January 25, 2012

We’ll see what happens, but I sure know I could use a refi!

Justin - Head of Innovation

January 25, 2012

We’ll see what happens, but I sure know I could use a refi!

Brad Haeger

January 25, 2012

Well put… “give those banks that were rescued by taxpayers a chance to repay a deficit of trust.” Thanks for the share… now I want to watch it.

Brad Haeger

January 25, 2012

Well put… “give those banks that were rescued by taxpayers a chance to repay a deficit of trust.” Thanks for the share… now I want to watch it.

Katie Minkus, R(B)

January 25, 2012

Interesting… I’d like to see what “No more red tape. No more runaround from the banks” actually means in practice. I recall that when the banks were initially bailed out, a large amount was supposed to go toward loans for small business owners, and that didn’t happen.

One of the biggest problems (besides the run around and red tape) that I believe is holding back the housing market from recovering is that the lending institutions are still far too conservative in their lending practices. For example, there is an entire community of people – REALTORS – who would like to invest in property they are witnessing conveying at low prices with historically low interest rates, but since REALTORS are essentially small business owners, it’s next to impossible to get a loan.

One thing that really bothers me is how the banks will qualify a person with a W2 on their gross income, but will only qualify a small business person on their net income after expenses and write offs. Let’s think for a moment here – what small business person do you know who would be willing to pay more in income taxes (ie: not take all their qualified write-offs) in order to show more net income to a bank in order to get a loan? That’s what I call “crazy-making.”

Will be interesting to see what happens…

Katie Minkus, R(B)

January 25, 2012

Interesting… I’d like to see what “No more red tape. No more runaround from the banks” actually means in practice. I recall that when the banks were initially bailed out, a large amount was supposed to go toward loans for small business owners, and that didn’t happen.

One of the biggest problems (besides the run around and red tape) that I believe is holding back the housing market from recovering is that the lending institutions are still far too conservative in their lending practices. For example, there is an entire community of people – REALTORS – who would like to invest in property they are witnessing conveying at low prices with historically low interest rates, but since REALTORS are essentially small business owners, it’s next to impossible to get a loan.

One thing that really bothers me is how the banks will qualify a person with a W2 on their gross income, but will only qualify a small business person on their net income after expenses and write offs. Let’s think for a moment here – what small business person do you know who would be willing to pay more in income taxes (ie: not take all their qualified write-offs) in order to show more net income to a bank in order to get a loan? That’s what I call “crazy-making.”

Will be interesting to see what happens…

Jeremy Stice

January 26, 2012

It would be fantastic if homeowners had increased flexibility in obtaining re-finances at these historically low rates. One of the critical issues is that there needs to be more flexibility on the equity position of the borrower. It is almost certain that in most Hawaii markets if someone purchased a property between 2003-2008, that their property is now likely worth less than what they bought it for. However, if lowering the up-front cost to the borrower by making the banks cover the origination fees to re-finance allows the borrower to lower their monthly payment and puts them in a financial position where they can keep the property- this is a win-win situation.

I agree with Katie’s point about bringing back some flexibility into the lending market for self employed/small business owners. I myself want to purchase property on Maui but I am one of those individuals who does have a considerable amount of allowable write offs and thus my net income is not truly indicative of what I can afford to pay for a property each month.

Time will tell.

Jeremy Stice

January 26, 2012

It would be fantastic if homeowners had increased flexibility in obtaining re-finances at these historically low rates. One of the critical issues is that there needs to be more flexibility on the equity position of the borrower. It is almost certain that in most Hawaii markets if someone purchased a property between 2003-2008, that their property is now likely worth less than what they bought it for. However, if lowering the up-front cost to the borrower by making the banks cover the origination fees to re-finance allows the borrower to lower their monthly payment and puts them in a financial position where they can keep the property- this is a win-win situation.

I agree with Katie’s point about bringing back some flexibility into the lending market for self employed/small business owners. I myself want to purchase property on Maui but I am one of those individuals who does have a considerable amount of allowable write offs and thus my net income is not truly indicative of what I can afford to pay for a property each month.

Time will tell.

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