President Obama on Wednesday unveiled a new mortgage relief plan for an estimated 3.5 million struggling Americans who owe more on their homes than the properties are worth — and, therefore, can't get new loans at today's low rates. By securing these people federally insured loans at reduced rates, Obama says, the program would save borrowers an average $3,000 a year. A new tax on big banks would cover the program's cost — $5 billion to $10 billion — a strategy Republicans oppose. Could Obama's plan really help Americans who are "underwater" on their mortgages?
Helping underwater homeowners helps everyone: Today's rock-bottom interest rates should be helping to "spur economic recovery," says Matthew Yglesias at Slate, by letting people refinance, and spend the savings on other things. But the millions who owe more than their homes are worth can't get new loans. If Obama can get this passed so underwater homeowners can get relief, he might have "finally hit on a job-creation idea that could be a game-changer."
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