Obama Housing Speech to Show Policy Shift As Home Prices Rise

NEW YORK ( TheStreet) -- When President Obama unveils his plans for the housing market in Phoenix Tuesday afternoon, there will be a noticeable shift in his agenda.

With home prices now well off the bottom, there will be less talk of foreclosure prevention, principal reduction and loan modifications and he will likely stay away from Wall-Street bashing.

Instead, his focus will now be on long term goals, such as improving access to mortgage credit and building a sustainable housing finance system.

According to a housing plan released to reporters, the President will continue to push for a broader refinancing program that will provide relief for "responsible" homeowners with private mortgages who are underwater but current on their payments.

But most of his focus will be on helping borrowers access mortgage credit, which has been scarcely available since the 2008 crisis.

The President will call for greater clarity in mortgage regulations in order to encourage banks to lend to borrowers.

The Consumer Financial Protection Bureau has already published its qualified mortgage rule, but until the qualified residential mortgage rule is written, the secondary market for all but the most pristine-quality mortgages will remain tight.

Obama is also expected to support a new "Back to Work" initiative at the Federal Housing Administration that will allow borrowers who have been re-employed and have demonstrated strong payment histories in the past 12 months to qualify for a mortgage through the FHA, as opposed to the current waiting period of 3 years.

Significantly, Obama is likely to share the Administration's vision for the future of the housing market.

There has been very little talk of this from the White House, except for a white paper released in 2011, so this is a welcome change.

The upshot is, the future housing finance system will be one with a far more limited role for the government.

The President will call for the end of Fannie Mae ( FNMA) and Freddie Mac ( FMCC), the housing finance giants that went bust during the boom years leading to a $180-billion bailout in 2008.

The White House Plan appears to be more supportive of the bipartisan Corker-Warner bill that envisages an explicit government guarantee but places private capital in a first-loss position.

Supporters of the Corker-Warner plan believe that it will allow more private capital into the market place, while ensuring that borrowers continue to have access to a 30-year fixed rate mortgage in good times and bad.

An alternate proposal by Rep. Jeb Hensarling (R., Texas) -- the chairman of the House Committee on Financial Services -- in contrast looks to eliminate the government guarantee altogether, which critics say would limit the availability of the 30-year fixed-rate mortgage.

The White House plan does not include a timeline for the winding down of Fannie Mae and Freddie Mac. It does however outline intermediate steps towards a new housing finance system.

These include winding down the agencies' portfolios by 15% every year, sharing more credit risk with private players, reducing loan limits to attract more private competition and working towards a common securitization platform that will exist after the agencies are wound down.

Most of these steps are already being taken at the agencies, under the guidance of their regulator the Federal Housing Finance Agency.

In another shift, the President will also call for measures to improve the availability of affordable rental housing, by ensuring a deep and liquid financing market for the development of multifamily housing.

This has been often neglected as the government, too often, has encouraged homeownership at the expense of renting.

Ending the GSEs, determining the role of the government in housing, increasing mortgage credit and encouraging affordable rental housing -- these are all steps that suggest the Obama Administration is finally willing to move forward on some of the more structural issues that face the housing market.

The question is, how much will get done?

The President will take questions from the public on Wednesday at 1:00 p.m. EDT in a session moderated by Zillow. Questions can be submitted via twitter to @Zillow using #AskObamaHousing. Or you can submit your question on Zillow's facebook page or submit a video on YouTube or Instagram or Vine using #AskObamaHousing.

-- Written by Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

More from Rates and Bonds

Benchmark 10-Year Yield Pulls Back After Touching 3% on Fed Rate Hike

Benchmark 10-Year Yield Pulls Back After Touching 3% on Fed Rate Hike

HSBC CEO: It's Time to Kick Into Growth Mode

HSBC CEO: It's Time to Kick Into Growth Mode

Here's Your Markets Playbook to Weather European Volatility, Trade Talks & More

Here's Your Markets Playbook to Weather European Volatility, Trade Talks & More

Market Chaos in Europe Hurts Now but the Long-Term Picture Is Still Strong

Market Chaos in Europe Hurts Now but the Long-Term Picture Is Still Strong

What's Driving the 10-Year Yield to Historic Levels This Week?

What's Driving the 10-Year Yield to Historic Levels This Week?