“If
you take the 20 million people who are making their mortgage payments
on time and give them that reduction, you are putting $8 billion a month
back into the economic engine.”
Adam Rodell Orange County Realtor
The Obama administration is considering several new ideas to aid the struggling housing market, one of which would allow homeowners with government-backed mortgages to refinance them at lower interest rates.
But according to a few local people, it’s not all that new. Orange County Realtor Adam Rodell, along with his family, friends and colleagues, have been calling this housing plan from Obama administration the Rodell Recovery Plan since late 2008.
“The genuine solution is not to be focusing on folks who have not been paying their mortgages, but to work with the folks who have been paying their mortgages and carrying their weight — bring their mortgages down to around 4%,” Rodell, an agent with Century 21 Beachside in Huntington Beach, said of the Obama administration. “I consider this the absolute solution for our entire economic crisis.”
The reason Rodell, who has been in the real estate market for over 13 years, thinks so highly of the Obama administration’s plan is that it is identical to a concept he came up with nearly three years ago. But since he doesn’t have the manpower and savvy anywhere near as potent as the president’s media relations juggernaut, Rodell has only shared his idea with family, friends and colleagues.
Rodell told his boss, Lenny Dong, vice president of Century 21 Beachside, about the plan about three years ago.
“It was just an idea he had and we were talking one day,” Dong said. “He suggested if we reduce everyone’s mortgage to 4% things would be a lot better.”
Under what could have, in another reality, been termed the Rodell-Obama plan, you take for example a homeowner who has a 5.5 percent interest rates for a $300,000 home and reduce the mortgage payment to 4%.
“Their monthly mortgage payment goes down by $375 a month,” Rodell said. “If you take the 20 million people who are making their mortgage payments on time and give them that reduction, you are putting $8 billion a month back into the economic engine.”
“There’s so many folks out there who cannot get financed because they have no equity, but they have good jobs, and solid payment record,” he added. “There are millions of Americans who are in this position who want to refinance but who can’t.”
The Obama administration initiative to allow certain borrowers to refinance loans that are backed by government-owned Fannie Mae and Freddie Mac or the Federal Housing Administration has at least partial backing from folks like Fed Governor Elizabeth Duke, who spoke about it favorably last week.
This goes contrary to many of the administration’s plans on housing, which Duke and others have stated reservations about in the past, such as the Home Affordable Refinance Program (HARP), which was launched in 2009. According to Duke and other detractors of that plan, an estimated four million borrowers were eligible for HAPR, but only about 800,000 had refinanced through the program.
And like most plans from one side or other in the government, the Obama-Rodell plan will likely hit some of the same partisan snags that any proposal to improve things seems to encounter nowadays.
“The Republicans, I’m afraid what they will do is say this is a clever tax hike,” Rodell said. “And the Democrats will use it as leverage. What this is going to take is just a normal person putting this out there. This is a total win-win for everyone, even the banking system, because it incentivizes homeowners to make payments. It’s the simplest solution. In 60 seconds we can solve this entire economic crisis.”
As soon as the Obama administration announced the plan, there was no shortage of people to state their opposition, or offer ideas they believe are better and less intrusive.
“The primary roadblock to the current programs are the government sponsored enterprises) themselves, not the lenders,” said Dennis Smith, the co-owner and broker of Huntington Beach-based mortgage firm Stratis Financial. “The lenders are reacting to how they are being treated by Fannie and Freddie. I can’t see