Housing activists fear Obama will choke mortgages, add $1,400 in fees

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Washington Examiner:

Top administration aides are pushing for President Obama to endorse a new mortgage scheme in his State of the Union address that housing advocates fear would kill mortgages to low income Americans and add up to $1,400 in fees to every new loan.

 

Housing and Urban Development Secretary Shaun Donovan and Obama economic aide Gene Sperling urged a key senator to press the president to support the plan that would replace mortgage giants Fannie Mae and Freddie Mac with another organization, according to the activists.

 

The legislation, dubbed Corker-Warner, after sponsors Sens. Bob Corker, R-Tenn., and Mark Warner, R-Va., would replace the two mortgage outfits with a privately capitalized system. The duo believe that it would protect taxpayers from future economic downturns.

 

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Sources say that Donovan and Sperling asked Sen. Tim Johnson, D-S.D., who chairs the Senate Banking Committee, to help get the president to back the Corker-Warner plan and mention it in his State of the Union address to Congress. Johnson has been skeptical of the Corker-Warner bill, saying he wants changes in it. A Republican House member has a dueling plan.

Housing activists told Secrets that although admirable in its effort to shore up the mortgage system, the Corker-Warner legislation would have the effect of only approving the most creditworthy applicants. And a fee to be charged to build a support kitty of cash could add up to $1,400 a year to every mortgage.