Obama details his plan for easier mortgage refinancing over Republican opposition

President Barack Obama provided more details on his plan to alleviate distressed homeowners in hopes of igniting the economy during a speech in Virginia yesterday, BusinessWeek reported.

As first proposed in his State of the Union address, Obama wants to make it easier for underwater homeowners to refinance their mortgages with low-interest, Federal Housing Administration-backed loans. To fund the plan, he is seeking congressional approval to tax large financial institutions, a measure Congress has twice rejected in the past two years.

It’s a stark contrast from the stance taken by Mitt Romney, who famously argued the best thing for the housing market is to wait until foreclosures run their course and the market bottoms out. The Wall Street Journal reported that many Republicans, led by House Speaker John Boehner denounced Obama’s latest proposals, rendering them difficult to pass.

If approved, appraisals and tax returns would not be required for homeowners to access the lower interest rates. Instead a borrower must show proof of employment, a credit score of 580 or higher and have had no more than one delinquency in the previous six months. The FHA-backed loans could not exceed the limits set for different markets, which range up to $729,750.

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“No more red tape, no more runaround from the banks,” Obama said. “A small fee on the largest financial institutions will make sure that it doesn’t add to the deficit.”

Separately, Obama also said his administration would mandate a Homeowners Bill of Rights, which would simpllify mortgage forms and better highlight costs and fees. That bill does not require congressional support.

Finally, he continued his push to sell foreclosed homes owned by Fannie Mae to investors who could maintain them as rental properties. The Federal Housing Finance Agency is exploring a similar plan, BusinessWeek reported. [BusinessWeek] and [WSJ]