The president continued his State of the Union preview tour Thursday in the American southwest, this time focusing on the housing market with a mortgage announcement the administration hopes will add a needed boost to new home sales.
“Buying a home has always been about more than buying a roof and four walls,” President Obama told a packed gymnasium at Phoenix Central High School.
It’s about “that sense of accomplishment that you were building something, for your family and your future.”
Obama has directed his Federal Housing Authority to reduce the fees attached to government loans for home buyers by half a percent, from 1.35 to 0.85 percent. It may seem like a paltry figure, but the White House estimates the lowered premium will put $900 back into the pockets of the average borrower, annually.
The administration says it will also push 250,000 homes into the hands of those who may not be able to afford it otherwise.
In all, Obama expects the move will affect 800,000 homeowners across the United States. The FHA is a popular lender for new buyers and those annual fees are tacked on to each month’s mortgage bill. But they have jumped significantly in the past five years, being a low 0.55 percent in 2010.
The president continues to strongly support long-term housing finance overhaul through legislation that requires private capital to take the risks and rewards in mortgage lending while preserving broad and affordable access for all creditworthy families.
The president also said his administration would continue to cut “red tape” between lenders and borrowers, and promised to preserve “sound underwriting standards” to assure homeowners receive loans they can fully pay. And he touted the Consumer Financial Protection Bureau’s elimination of the “worst practices of the past.”
“Right now, Michelle and I live in rental housing. We don’t own where we live; we’ve got two years remaining on our lease. I’m hoping I get my security deposit back,” Obama quipped. “Although Bo and Sunny have been tearing things up occasionally.”
Before arriving at the high school, the president and Housing and Urban Development Secretary Joaquim Castro visited a single-family housing complex owned by a local nonprofit, Chicanos Por La Causa. The subdivision has received nearly $2 million since 2010 in federal grants related to the Recovery Act.
Prior to the group’s involvement, the neighborhood held 25 vacant and overgrown lots, according to a White House statement. The lot aims to sell homes to families that make $40,000 to $60,000 a year.
The Phoenix suburbs were emblematic of the 2008 housing bubble. For example, the nearby city of Maricopa, with its tiny population of 1,000 at the turn of the millennium, saw a boom to over 33,000 residents by the burst.
Then, suddenly, one in 10 homes was empty again. Dwellings that hadn’t yet lost their “new home smell” were void of life. Since the recovery, the city’s population growth has leveled out, sitting at 45,000 today.
Obama came to this city as the second leg of a three-part tour outlining his upcoming State of the Union address. In Detroit Wednesday, he touted the recovery of the auto industry; Friday he will conclude in Knoxville, Tennessee, to speak on job skills and education.
The decision to give these State of the Union spoilers is an unusual one. Typically, presidents keep the major points of the address under wraps until the night of the annual speech, then tour to promote them afterwards.