If there's one issue that could help President Obama's sagging poll numbers or propel one of the contenders running for the GOP nomination, it's coming up with a plan to deal with the struggling housing market.

Unfortunately, the mortgage mess is so tangled it may take years for lenders to sort out. Obama and the other presidential hopefuls, meanwhile, realize the clock is ticking to the 2012 elections. A workable plan on housing could sway a great many potential voters, many of whom are disgusted with the non-action with this administration and congress.

According to CoreLogic, a real estate research firm, there are 11 million who are "underwater" borrowers, meaning they now owe more than their homes are worth. That's 22 percent of all U.S. homeowners.

In 2009, the Obama Administration initiated the Home Affordable Refinance Program, allowing homeowners to refinance mortgages at a lower rate. Obama had envisioned the program helping four or five million homeowners. As of late August, however, fewer than 900,000 homeowners and only about 72,000 had taken advantage of the plan.

Unfortunately, the program was limited to only those borrowers whose home values were no more than 25 percent below what they owed on it. Millions of underwater borrowers in the hardest hit areas, whose homes have lost nearly 50 percent of their value, were ignored.

On Monday, Obama unveiled another housing plan and this one loosens some requirements, thus expanding the eligibility and waiving a number of the bank fees connected with refinancing.

There are, however, still limitations. The program is only for those whose loans are owned or backed by Fannie Mae or Freddie Mac, which own or guarantee about half of all U.S. mortgages.

The loan must have been sold to Fannie and Freddie before June 2009; mortgages that were refinanced over the past 2 1/2 years aren't eligible.

The borrower must also be current with mortgage payments. If there has been a late payment within six months, or more than one in the past year, the borrower is disqualified from the program.

Even if a borrower meets all the requirements, the bank still has the final say and is free to reject an applicant.

The administration estimates that up to one million could qualify under the new program, which is still less than 10 percent of those homeowners underwater. The administration feels, however, that even if that one million can save $2,500 annually by refinancing, it will provide a needed boost to the housing problems.

With Americans tired of seeing the costs for essentials like fuel, groceries and home mortgages escalating and eroding their paychecks, the president knows full well that the economy will be the all-important issue in next year's election. Obama's announcement Monday, therefore, came as no surprise, given his declining poll numbers and his failed economic stimulus which is providing Republican contenders with plenty of campaign ammunition.

Monday's mortgage refinance plan could be a start but much more needs to be done to attack the problem. The housing crisis is an anvil around the neck of this economy, choking off any chance for a recovery.

By Jim Zbick

jzbick@tnonline.com [1]