WASHINGTON (Reuters) - While some U.S. governors were embracing the housing plan President Barack Obama announced last week, as a way to bolster their own assistance efforts, others worried that the plan is unfair.
“We are very anxious to see the loan modification program that the president is proposing as we think it will mesh very closely,” New Jersey Governor Jon Corzine, a Democrat, said at a National Governors Association meeting on Sunday.
His state has developed a program to help distressed home owners in an “aggressive mediation approach” where borrowers and lenders take a court-ordered break to renegotiate mortgages. Corzine said he hoped the plan could “leverage off the dollars” provided in Obama’s plan.
Obama’s $275 billion program would allow borrowers facing foreclosure to get their payments reduced through modifications jointly paid for by lenders and the U.S. Treasury. It would also help those who cannot qualify for conventional refinancing because their home values have dropped, to refinance through Fannie Mae and Freddie Mac.
North Carolina Governor Bev Perdue, also a Democrat, said her state’s program could be integrated with any federal action, as well.
While Washington state has also established a mediation program, said Governor Chris Gregoire, it has only been able to give it a “small amount of money.”
“We desperately need this federal solution,” she said.
But South Carolina Governor Mark Sanford, a Republican who has also opposed Obama’s economic recovery plans, said he had reservations.
“If you look at the number of performing loans versus non-performing loans ... the overwhelming bulk of folks across this country ... are in fact paying down their mortgages,” he said. “There’s a real equity question as to when the folks who have been playing by the rules ... have the person across the street bailed out.”
Sanford also said he did not think a judge rewriting mortgage contracts was in the spirit of American laws and he was not happy with how the plan would be carried out.
“There’s something fundamentally flawed about going back to Fannie and Freddie, two of the biggest perpetrators of what went wrong with the housing market, to be two of the key instruments in, quote, solving the mortgage crisis,” he said.
Federal agencies charged with implementing the plan hope to have it in place by March 4.
Reporting by Lisa Lambert, additional reporting by Andy Sullivan; Editing by Maureen Bavdek