The government "will step up refinancing so that homeowners can move into more affordable mortgages," President Barack Obama said in his first State of the Union address Wednesday evening.

"We’re working to lift the value of a family’s single largest investment: their home. The steps we took last year to shore up the housing market have allowed millions of Americans to take out new loans and save an average of $1,500 on mortgage payments."

Obama did not elaborate on how the government would spur the increase in refinancing and lower mortgage costs, and focused more on jobs-related issues.

He said the nation must avoid a repeat of the housing and financial run-up that preceded the economic crisis.

"We cannot afford another so-called economic expansion like the one from last decade — what some call the lost decade — where jobs grew more slowly than during any prior expansion, where the income of the average American household declined while the cost of health care and tuition reached record highs, where prosperity was built on a housing bubble and financial speculation," Obama said.

The limited discussion on housing-related issues prompted some negative commentary from news pundits and government officials.

"There were no details. Nor were their bold new ideas to address foreclosures, improve home values, restore faith in the mortgage-backed securities markets, shore up FHA, resolve the fates of Freddie Mac and Fannie Mae, or rekindle demand (when) the tax credits expire in three months," wrote Steve Cook, former National Association of Realtors spokesman, in an article at

"I appreciate that the president embraced many of the fiscal policies of balanced budgets and pay-as-you-go spending, priorities I have advocated since I’ve been in Congress. However, he failed to embrace the stark economic reality faced by the people of the Central Valley who continue to lose their homes to foreclosures, and their farms and farm jobs to the water crisis," said California congressman Dennis Cardoza, D-Merced.

Foreclosure data company RealtyTrac reported that Merced had the third-highest foreclosure rate in the nation, with about one in 10 homes in some stage of foreclosure in 2009.

The Federal Housing Administration, which insures mortgages in which borrowers are allowed to pay as little as 3.5 percent for a downpayment, currently backs about 30 percent of all loans for home purchases and 20 percent of refinanced loans.

Through another government program, the Home Affordable Modification Program, more than 900,000 borrowers have reportedly begun trial loan modifications since the program’s start, and about 110,000 were approved for permanent modifications as of Dec. 31, 2009. The program was intended to modify loans for millions of eligible borrowers (see story).

In polls across the country, including a survey conducted by real estate search site Trulia, job creation and security have ranked among Americans’ top concerns, however.

Obama said during his speech that "government can create the conditions necessary for businesses to expand and hire more workers."

Noting the difficulty even profitable small businesses have had in securing loans, the president proposed taking $30 billion of the bailout money Wall Street banks have repaid to help smaller, community banks make loans to small businesses.

He also proposed a tax credit that he projected would go to more than 1 million small businesses nationwide should they hire new workers or increase wages, and advocated the elimination of capital gains taxes on small-business investment. Tax breaks should also go to the companies that keep jobs in the country vs. outsourcing them overseas, he said. …CONTINUED

For businesses big and small, Obama proposed tax incentives to encourage them to build new factories and buy new equipment, especially in the clean-energy sector.

For homeowners, he proposed rebates to those who make their homes more energy efficient.

"Now, the House has passed a jobs bill that includes some of these steps. As the first order of business this year, I urge the Senate to do the same, and I know they will … People are out of work. They’re hurting. They need our help. And I want a jobs bill on my desk without delay," Obama said.

Obama also defended the steps his administration has already taken to mitigate the financial and housing crises.

"If we had allowed the meltdown of the financial system, unemployment might be double what it is today. More businesses would certainly have closed. More homes would have surely been lost," he said.

The American Recovery and Reinvestment Act, otherwise known as the stimulus bill, cut taxes for 95 percent of Americans, he said, and included tax cuts for homebuyers, college students, parents and small businesses.

"Because of the steps we took, there are about 2 million Americans working right now who would otherwise be unemployed … And we’re on track to add another one and a half million jobs to this total by the end of the year."

Benefits for the middle class were also a major theme in this year’s speech, including policy recommendations from a task force chaired by Vice President Joe Biden.

"That’s why we’re nearly doubling the child care tax credit, and making it easier to save for retirement by giving access to every worker a retirement account and expanding the tax credit for those who start a nest egg," he said.

This image, created at, is a "word cloud," or visual representation, of the complete text transcript of President Obama’s State of the Union speech — the word cloud makes most prominent those words that appear more frequently in a given text.


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