HUD Chief Defends Obama Housing Plan

By: Kevin Hechtkopf
Topics: In The News

(CBS)

Secretary of Housing and Urban Development Shaun Donovan this morning defended the Obama administration housing bailout announced last week in Phoenix, saying that controls were in place so that speculators and others won't be able to unfairly take advantage of the plan.

"We have designed this plan to make sure that the folks who did take advantage of people -- whether it was lenders or speculators or flippers -- that they're not eligible for this plan," Donovan told host Bob Schieffer on CBS News' Face The Nation. "We're going to have a very strict program to make sure that people who participate are what they say they are. We're not going to benefit those who took advantage before."

Donovan said the plan would benefit more than just those homeowners who have their mortgages readjusted. Specifically, he pointed to up to $200 billion that will be funneled to backstop Fannie Mae and Freddie Mac which he says will help keep overall mortgage rates low.

The secretary credited actions by the Obama administration that have made mortgage rates "as low as we've had in a generation."

"We have to keep those mortgage rates low because anybody who has got good credit, who wants to go out and buy a new home or refinance, they benefit by having those low mortgage rates," he said.

The second part of the plan, Donovan said, helps people refinance who are "playing by the rules" but are also slightly "underwater" on their mortgages (where they owe more than the house is currently worth). And the third part is $75 billion directed to help modify loans for those who are "struggling the most," he said.

"We have millions of families across this country through no fault of their own that are in trouble on their mortgages," he said. "Let's remember that every time there's a foreclosure, a next-door neighbor loses value in their house too… by stopping foreclosures, this benefits everyone."

As for how many foreclosures may be forestalled by this plan, Donovan said the administration thinks the modification part would stop three to four million foreclosures and that four to five million could be helped by the changed refinancing rules.

Donovan also addressed the administration's push to Congress to allow bankruptcy judges to modify mortgages. He said that the administration is only pushing for that authority on existing mortgages so that it doesn't hurt the mortgage market even more.

"What we've proposed, and we're working with Congress on, is a modification for loans had that are in existence now -- the ones that have caused all the trouble," Donovan said. "We're not talking about applying this to loans going forward. And we think doing that means that it's not going to affect in any significant way mortgages in the future."

The secretary also stated that the administration sees bankruptcy as a "last resort."

"We don't think that bankruptcy court is the answer to the problem," he told Schieffer.

More from Face The Nation (2.22.09):

Three Governors Say: We'll Take Stimulus Cash

Ohio Gov.: Honda Needs Big 3 To Survive

Read the full transcript> (pdf file)

Kevin Hechtkopf
Kevin Hechtkopf is CBSNews.com's politics editor.
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by robert2237 February 23, 2009 10:03 PM EST: Yeah sure. No thanks I don't want my tax dollars going to help someone out who got in over their head and now crying for help. Let them lose the house rent a apartment and then when the mess is finished we can look for people to start doing the right thing. This is paying someone to do what they should have done anyway. It is a disgrace to all who have worked to keep their payments up on their homes. Just another give away to those who don't really want to work and get ahead. There are those who have lost a job and I have no problem with maybe helping them on for a few months on making their payment in a low intrest loan that they will pay back in a few years but give them something no thanks. If they got a bad loan thier fault that is why you should read what you are getting not just sign. So I say no bailout on home morgages short term loans to those tha lost jobs the rest look for a apartment now. You can't stay in your house on my money.; Reply to this comment


by craigh9 February 23, 2009 11:52 AM EST: Property value is important in general but it greatly depends upon your long term situation. My wife and I fully expect to live in our home for at least the next 15 years. We purchased a home we could afford and with interest and the like will end up paying $700,000 for our home.
Under this plan my neighbor that purchased roughly the same house but that was beyond his means that has the same value as mine on the market MAY pay considerably less if the gov't reduces his principle and interest because "he's in trouble". The end result would be we would both hold similar assets but he ultimately would pay up to 33% less money to obtain it - THAT IS NOT FAIR TO THOSE THAT DID THE RIGHT THING!
There needs to be incentives for those that acted responsibly, otherwise this is nothing but middle class welfare.; Reply to this comment


by irmcvet971 February 23, 2009 11:45 AM EST: Wait a moment. You can lie about where she lives, and make all the excuses you want, but when she does the same you mock her?

I do not understand. A lie is a lie

Posted by TheFullStory at 01:49 AM : Feb 23, 2009

Oh PLEASE! It's a friggin Knuckle Dragging Southern Fascist for goodness sake! NOTHING more needs to be said. ROFLMAO She CAN'T accept the decision the American People made in the Election and is willing to do or say just about anything to bring down our President. THAT is as it has been for nearly 150 years now.; Reply to this comment


by thefullstory February 23, 2009 4:49 AM EST: FLSunJnky

Wait a moment. You can lie about where she lives, and make all the excuses you want, but when she does the same you mock her?

I do not understand. A lie is a lie; Reply to this comment


by excelsior9 February 23, 2009 4:43 AM EST: Of course he is gonna defend Obama. I'm sure he wants to keep his job. Lets face it, he is a minority in the new Obama administration. White, yeah I said it.; Reply to this comment


by flsunjnky February 23, 2009 4:11 AM EST: Runs her computer and a night light though.; Reply to this comment


by flsunjnky February 23, 2009 4:10 AM EST: Had a bunch of cords running to an oil pump rig with a makeshift connector secured with duct tape.; Reply to this comment


by flsunjnky February 23, 2009 4:06 AM EST: Rowdy, you dont care about property values because you live in a trailer park....but you better beleive that us homeowners care about property values.....

Posted by chitownfire1

Her last address was a tent in a federal recreation area of sorts.; Reply to this comment


by flsunjnky February 23, 2009 3:55 AM EST: Maybe siding up with Rush with a bottle of pain killers would take the "EDGE" off?; Reply to this comment