Obama Cheers Recovery in State of the Union Preview

In a 30-minute speech Thursday morning at Central High School in Phoenix, President Barack Obama spoke of the progress the housing market has made since 2009 and measures his administration is taking to help everyone achieve homeownership.

Specifically, Obama addressed the topic of the Federal Housing Administration (FHA) lowering its mortgage insurance premiums down from 1.35 percent to 0.85 percent, a move that is expected to save homebuyers an average of about $900 per year in mortgage payments. That move will help the economy as a whole and not just housing, the president said.

"If they're saving $900, that's money that's going to be going throughout the economy," Obama said. "Over the next three years, these lower premiums will give hundreds of thousands of more families a chance to own their own home. It will help making owning a home more affordable for millions more households overall in the coming years.

"Keep in mind hundreds of thousands of new buyers is going to mean a healthier housing market for everybody. Even though you've already got your mortgage or own your own home, if your neighbors are buying more homes, that's lifting the home market here, which means the value of your home starts going up, and that's good for you. It means fewer foreclosure signs as people fix up old properties. It means more construction, which means more jobs, which means a better economy."

Some analysts expected that Obama would not bring up the hot topic of the elimination of government-sponsored mortgage giants Fannie Mae and Freddie Mac, but he did briefly mention it. The two enterprises received a combined $188 billion bailout in 2008 at the time they were taken under conservatorship of the Federal Housing Finance Agency (FHFA), but have since returned to profitability.

"The bottom line is we don't think there's anything wrong with pursuing a profit, but we want to make clear that the days of making bad bets on the back of taxpayer money and then getting bailed out afterwards, we're not going back to that," Obama said. "We've worked too hard, and everything we've done to heal the housing markets, we want to preserve. But we do want to make sure that the housing market is strong and that responsible homeowners can get a good deal, or people who have saved, done the right thing and now are looking to buy their first home, we want to make sure they can get a little bit of help."

The president warned that the new lower FHA mortgage insurance premium rates are for responsible buyers, and he cautioned the audience against borrowing to buy things they could not afford—and he spoke of actions taken against lenders who have pressured borrowers to accept loans they could not afford. He specifically mentioned the creation of the Consumer Financial Protection Bureau in 2010 as part of the Dodd-Frank Wall Street Reform Act and the record settlements that have been reached with financial institutions in the last year for engaging in predatory lending practices that led up to the financial crisis.

The overall progress of the housing market in the last five to six years is not an accident, Obama said, but rather it is what happens when policies put middle class families first. And while much progress has been made, he said there is still a lot of work to do.

"There are workers today with jobs who didn't have jobs last year," he said near the end of his speech. "There are families who've got health insurance who didn't have health insurance before. There are students who are in college who didn't think they could afford it before. There are heroes who have served tour after tour who are finally home with their families. There are auto workers who are building great American cars now when they thought that those plants were going to shut down. America is coming back, and the key, Arizona, is for us all to work together so that make sure we keep it going."