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For housing President Obama announcing a brand new plant today in his first news conference of the year that would lower fees for borrowers with loans from the Federal Housing Administration or FHA.
You've -- on time on your payments if you've done the right thing if -- acted responsibly.
You should have a chance to save that money.
On your home.
How much will this new program cost joining us now in -- first on Fox Business interview was Shaun Donovan secretary of housing and urban development sector thank you so much for coming on great to see you.
Great see -- -- so I according to the president's plan that we're going through some of the numbers.
This plan will save two to three million homeowners about a thousand dollars now that adds up to about.
Two to three billion dollars we know there's no such thing as a free lunch where does that money come from.
Well first of all.
That important thing to remember about this this is not only good for homeowners in terms of that savings it's not only good for the economy.
In fact that average homeowner will save another more than 2000 dollars a year on a lower interest rate beyond the thousand dollars in lower right when you -- pace for that.
Well the good news is that it benefits the taxpayer because even though the fees that come into FHA or lower.
The losses to FHA are also lower because those families will be able to better afford the mortgage is so we think in the long run.
This actually saves money for the taxpayer rather than losing money.
It attacks up -- can you guarantee.
That people will participate in this program there have been other programs that had.
Somewhat anemic participation rates what gives you the sense that this'll be the one that works.
The first thing I would say is we're not forcing anybody to participate we're making this option available to homeowners.
Those two to three million can choose to -- -- or not we certainly don't expect every one of them.
To take it out but what I can tell you is.
This is very similar to the efforts that the president announced last fall to help Fannie Mae and Freddie Mac borrowers refinance and we've seen.
Very very strong interest just in the last few weeks as we all opened up those changes.
We've had 300000.
That have come in and applied.
-- higher than we expected and that's very encouraging.
In terms of what we expect to see for -- Jack why don't wanna sound like a broken record but again if if you're talking about two to three billion dollars savings of home from -- order homeowners you expect to.
Know exactly where that money comes from now I understand it if projections work out it should benefit everybody that doesn't always happen.
Shouldn't congress because the president said he doesn't he congressional approval of this if this does end up.
To a three year of two to three billion dollar hit to taxpayers shouldn't congress be playing some kind of role in approving events.
Well look at.
I don't agree with your map in terms of of how we get there but.
Just specifically to take the numbers we expect lower fees.
This year to FHA to be hot somewhere in the tens of millions to.
Hundred billion dollars in that range.
And the truth is that.
We are making right now about ten billion dollars a year for the taxpayer in terms.
I I profits if you will from FHA loan so we think that we could well afford this and on the other side.
It will low -- the -- that those homeowners pay.
That will boost consumer spending and it will make those loans less likely to default for FHA that's why economists across the political spectrum think.
That opening up more refinancing is one of the best things that we can do for the economy and it makes sense for taxpayers so we think this is a win win.
When you focus it on -- the good actors in all of this people who have made their payments of mr.
secretary what about.
The role for servicemen and women in this -- will -- encourage them -- how will they get to really benefit from something like this.
It's a great question and that's.
That's something else the president announced today as part of this landmark servicing settlement 25 billion dollars.
That we announced just a few weeks ago out one piece of it will protect.
Service members who did -- foreclosed on and shouldn't have been -- that was breaking the law by some of these servicers.
Or those who were charged higher rates than they should -- they can get compensation.
At the same time we're putting in place servicing standards that make sure going forward.
If a service member is asked to move overseas to move to another base too often they've been forced to leave their family home.
Because they couldn't get a short sale on their home they couldn't get a modification.
This changes that we want to make sure that if somebody serving their country they're going to risk their life.
We should make sure that they're they don't have their own taken.
Or -- they can keep their family together even if they're underwater quick final question that the federal government now originates over 90%.
Home mortgages isn't that dangerous -- it shouldn't we find a way of moving the government out of that equation of moving the private sector and there's no question and in fact we put out a proposal for what that future housing finance system should look like last year that said.
We ought to be shrinking our role and in fact over the last two years.
FH case has strong as a share the market because we've been lowering our our loan limits are only making smaller loans.
And because we've been raising our fees on new loans to make sure that we don't compete with the private sector so we are moving in that direction.
We just have to balance that to be careful that we're not.
Stopping what we see as the recovery that's happening in the economy more broadly.
And the stabilization that's happened in the housing.
-- Shaun Donovan secretary of housing and urban development thank you so much we appreciate it do it thanks mistress.