White House official stops in Raleigh to discuss Obama's housing refinance plan

U.S. Housing and Urban Development Secretary Shaun Donovan stopped in Raleigh Thursday to discuss President Barack Obama's proposal to help more homeowners refinance. 

Donovan says 20,000 families in North Carolina currently owe more on their mortgage than their house is worth.

In addition to helping homeowners refinance, Donovan says the proposal will help "responsible" homeowners who fall on tough times.

"If you lose your job or run into a medical emergency, you should know that when you reach out to your lender to say, 'hey, could I get a couple of months where I could lower my payment while I look for a job'… that you’re going to have your phone call returned," Donovan said

Adrienne Punter has lived in her home for 13 years. After losing her job, Punter sought help through housing counseling agency Triangle Family Services, and was accepted into a program that helped her make payments and stay in her house while searching for unemployment.

"I just cried because I was so happy that now I can be relieved for a little while longer and keep searching for employment without that [mortgage] hanging over my head,” said Punter, who begins a new job on Monday.

Donovan pointed to Punter as an example of how helping homeowners make payments also helps their neighbors.

"When your neighbor's house goes into foreclosure, your house loses five to ten thousand dollars in value that very same day… and so by helping folks stay in their homes when they are unemployed we are also going to help all the families in those neighborhoods that are doing the right thing and paying," Donovan said.

On Wednesday, Obama proposed a vast expansion of government assistance to homeowners, aiming to make lower lending rates a possibility for millions of borrowers who have not been able to get out from under burdensome mortgages. Despite historic low interest rates, however, banks have been reluctant to refinance loans of "underwater" homeowners.

Obama is asking Congress to pass legislation that would make it easier for more borrowers to refinance their loans, creating a new program through the Federal Housing Administration that would have the government assume the risk for the new mortgages. The fee on large banks that Obama is proposing would finance the FHA's insurance fund.

Donovan says Obama's plan only applies to "responsible" homeowners -- people who are current on their mortgage payments and have good credit.

The president's proposal is laden with election-year politics and faces a difficult path in Congress. Obama wants to pay for the estimated $5 billion to $10 billion cost with a fee on the nation's largest banks, a proposal that has failed to win support even when Democrats controlled both the House and Senate.

In addition, its potential impact could be limited by the fact that it would not apply to borrowers who are behind on their home loan payments, those most threatened by foreclosure.

The housing issue, while national in scope, particularly resonates in election battlegrounds such as Nevada and Florida that have faced record foreclosures.

The plan faces long odds in Congress. Rep. Spencer Bachus, R-Ala., chairman of the House Financial Services Committee, said the refinancing plan proposes "to get out of the hole we're in by digging deeper."

"He wants lenders to make more of the same risky loans without documentation of income or ability to repay that got us into this mess in the first place," Bachus said. 

Triangle Family Services in Raleigh, hosted Thursday’s press conference.