A first round of questions about President Barack Obama’s proposed $75 billion foreclosure rescue Wednesday centered on prospects for abuse and potential inequities in rewarding deadbeat homeowners while doing little for those merely struggling.
Even before Obama delivered his plan to stem home foreclosures Wednesday, Republicans had organized events to blunt his efforts — sending a signal that his plan may be a tough sell with lawmakers.
While giving few details of exactly how the massive outlay will be monitored, Obama said there was no provision for rewarding the “unscrupulous or irresponsible.”
“The plan I’m announcing focuses on rescuing families who’ve played by the rules and acted responsibly, by refinancing loans for millions of families in traditional mortgages who are underwater or close to it, by modifying loans for families stuck in subprime mortgages they can’t afford as a result of skyrocketing interest rates or personal misfortune,” Obama said at a rollout of the plan in Arizona.
The latest bailout program may get a cold reception in Congress, where opponents of Obama’s stimulus plan were able to knock a few percentage points off public approval ratings for the program before it passed.
Obama wants to take $75 billion from the previously approved financial bailout package to help an estimated 9 million homeowners refinance their homes or hold off foreclosure. The package also includes incentives for lenders to work with mortgage holders, among other provisions.
Obama has indicated he plans to play tough offense in selling the foreclosure package, which comes hard on the heels of a $35 billion loan request from automakers, a $2 trillion bank rescue and the $778 billion economic stimulus plan.
Even before all the details were known, criticism of the plan centered on government oversight and how the government will prevent taxpayer money from falling into the hands of deadbeat homeowners and unscrupulous bankers.
Rep. Jeff Flake, an Arizona Republican, complained that Obama’s plan would shift debt onto the backs of taxpayers.
“How will borrowing more money to pay for bad loans solve the problem?” Flake said. “President Obama’s talk of individual responsibility seems to be at odds with details of the plan.”
The administration wants quick results on the foreclosure package, and several of its provisions will not require congressional approval.
Even so, House Republican leader John Boehner, of Ohio, told Obama he wanted to make sure the plan was “responsible” and protected the interests of taxpayers.
Earlier this week, the president indicated he would no longer measure his own success based on how many Republicans support his agenda. Among other tactics, the administration may use celebrity spokesmen to generate support for the foreclosure package with the public.
Obama announced the plan in the home state of campaign opponent Republican Sen. John McCain, who opposed the stimulus package last week.
Home foreclosures in the once booming state of Arizona have exploded, and the president is expected to use such location targeting to get lawmakers from similarly hard-hit areas on board with his plan.
For their part, McCain and fellow Arizona Republican Sen. Jon Kyl said they thought a better way out of the foreclosure mess would be through more tax credits for homeowners and buyers.
Republicans also are expected to oppose a provision of Obama’s proposal that would give bankruptcy judges more power to reduce mortgage rates of homeowners facing foreclosure.
