Obama Adds Foreclosure Rescue Plan To Arsenal Meant To Combat Recession; Auto Industry Asks Congress For Billions More In Survival Loans
KYRA PHILLIPS, CNN ANCHOR: And we're pushing forward instead falling further and further behind. That's the goal of a blockbuster plan to make America's mortgages manageable and to forego foreclosures for everybody's sake. Durango, Hummer, Saturn and Saab. GM and Chrysler say they can't survive with them. Can they push forward without them? Hello, everyone. I'm Kyra Phillips at the CNN world headquarters in Atlanta. You're live in the CNN NEWSROOM. Well, it's a story blowing up on the Web and the airwaves today. A cartoon in the "New York Post" featuring two policemen and a dead chimpanzee. The drawing clearly a nod to Monday's mauling that ended when cops shot a pet chimp in Connecticut. It's the text that's blowing people away. We're going to show you why. The newspapers is being blasted for at best, poor taste, at worst, violent and potentially racist overtones. Reverend Al Sharpton plans to picket "The Post" tomorrow. He's with us live this hour. Can't afford to leave, can't afford to stay. That's where we begin. President Obama says that's a crisis facing millions of American home owners and dragging down the economy. Today is the day the president unveiled his Homeowner Affordability & Stability Plan with a price tag estimated at $75 billion. It's based on new and more affordable mortgages for people on the brink of foreclosure, as well as for homeowners who are upside down, owing more than their homes are now worth. Among the incentives, the plan would offer lenders subsidies for lower interest rates. But it would also do something to home lenders have fought for decades, allow bankruptcy judges to rewrite mortgages just like they can many other loans. Banks and lenders won't be forced to cut rates or payments for anybody, but the president hopes this is an offer they just can't refuse. The economic stimulus, phase two of the bank bailout. The automotive action plan, now this. CNN's Suzanne Malveaux traveling with the president in Arizona. Suzanne, have we now covered all the crisis is zones?</s>SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: I think there are probably going to be some more crisis zones, Kyra, in the future. But this is one of those things where the government says that they're actually going to keep 9 million - 9 million - people in their homes if all of this works out. The price tag $75 billion. One of the incentives you mentioned, obviously the government to provide subsidies to Fannie Mae and Freddie Mac to allow them to actually reduce some of those monthly rates. Another program actually allowing homeowners that owe more than the value of their home to refinance. That has never been done before. You look at this plan and it does have some teeth to it. But the president also wanted to make it clear here, he's kind of preempting some of the criticism we've heard, is that perhaps this will reward bad behavior from the banks or homeowners, people who have been irresponsible. The president making it clear here that this is not for everyone. This is specifically for people who have fallen on hard times through no fault of their own. Take a listen.</s>BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The plan I'm announcing focuses on rescuing families who played by the rules and acted responsibly. By refinancing loans for millions of families in traditional mortgages who are underwater or close to it, by modifying loans for families stuck in subprime mortgages they can't afford, as a result of skyrocketing interest rates, or personal misfortune, and by taking broader steps to keep mortgage rates low so that families can secure loans with affordable monthly payments.</s>MALVEAUX: And, Kyra, the president obviously making that announcement here in Phoenix, Arizona. He really wanted to highlight the situation a lot of people are going through here in Phoenix. We are talking about 40,000 people who lost their homes last year, and 117,000 for the state of Arizona. So clearly he wants to let the American people know he understands what they're going through. A lot of people here in this community listened very carefully to the president's plan - Kyra.</s>PHILLIPS: Suzanne Malveaux, thanks so much. Unless you own your home free and clear, you fall into one of three categories: You've lost your home to foreclosure already; you've fallen behind in your payments and foreclosure actions have started or soon will; or, you're making your payments but still want a break on your interest rate. This hour we're going to see what, if anything, the president's plan offers each. First, though, let's answer some of your most pressing questions about being in foreclosure. Our Personal Finance Editor Gerri Willis here with the bottom line. I understand we've been getting a lot of emails, Gerri?</s>GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: We have been. There are a lot of emails out there. I think you got the first one from Scott in Michigan?</s>PHILLIPS: Actually, I wish I did. I was told you had them. Do you have them?</s>WILLIS: All right, I've got it.</s>PHILLIPS: All right. Go right ahead.</s>WILLIS: He asked, "We are foreclosing on our home. We have to be out by May 21st. How will this package help us afford the home before we have to move?" I have to say, well, Scott, if your loan is scheduled for foreclosure soon, you need to contact that mortgage servicer. Mortgage lenders have said they will postpone foreclosure sales on all mortgages that may qualify for modification. So that's a potential out for you. Another question, we have here, this is from, let me read the bottom of that, it's from Sue. Sue asks, "We declared bankruptcy last year. We've kept up our two mortgages. It's more than 31 percent of our income now and the first mortgage is a five-year ARM. What about us? Can we get help from this plan?" Well, Sue, it's hard to know all the details of this eligibility, but this package my reduce the size of your loan. The other possibility is getting a loan modification. You said your loan is more than 31 percent of your income and that is one of the criteria in the president's plan for getting a loan modification. Your best bet, call your lender, ask about whether you qualify for reduced payments. You also want to contact your bankruptcy attorney to see if there's a possibility you can do what they called a cram down, where the bankruptcy judge writes down your mortgage dealt - Kyra.</s>PHILLIPS: All right. Gerri, thanks. I'll be a little more organized next time and have those emails for you. We've been getting a lot of them. Thanks, Gerri.</s>WILLIS: Thank you.</s>PHILLIPS: Gerri will be back in about 20 minutes to help all of you homeowners in good standing to understand your options as well. Well, Federal Reserve Chairman Ben Bernanke is pledging to do everything within his power to help lift the United States out of recession. Bernanke spoke just short time ago at the National Press Club in Washington. Under Bernanke the Fed has cut its key interest rate to near 0 percent. And it's taken a number of other dramatic steps to try and stabilize the economy. The U.S. Treasury will apparently have to add a lot more money to those checks it's writing to try to save General Motors and Chrysler . Both automakers say it will take more than double the $17 billion they've already received in government loans. GM says it could need up to $30 billion total. That includes a $13 billion that it's already received. Chrysler wants $5 billion on top of the $4 billion it's already gotten. And as part of their restructuring plans GM says it will cut 47,000 more jobs; Chrysler plans to slash 3,000 more. In addition to the job cuts, both automakers are also making some major changes to their product lineups. Susan Lisovicz is at the New York Stock Exchange with a look at which models and brands are being eliminated, along with what it means for all of us drivers. Hey, Susan.</s>SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Hey, Kyra. Both General Motors and Chrysler are adjusting their lineups as they desperately try to slash costs. Which vehicles won't we be seeing on the roads much longer? Chrysler is shedding the Dodge Aspen and Durango, as well as the PT Cruiser. We see models come and go all the time, but brand extinctions are much rarer, and that is what GM is planning. The company is also eliminating its Hummer brands this year and its Saturn line by 2011, while the future of the Saab division is up in the air. Obviously people who drive those vehicles are asking, what happens to my car when the brands go away? Experts say the companies will continue to honor warranties, even if the brand or model no longer exists and will continue to supply replacement parts. It's such a tough time for auto sales, the carmakers want to improve overall reputation. So keeping customers happy is important. Leases should also remain stable but the resale value of the brands, that could tumble, Kyra.</s>PHILLIPS: The slowdown in the car sales has hit more than just the automakers, though, right?</s>LISOVICZ: Yes. A number of auto parts companies are already in bankruptcy, Kyra. And tire giant Goodyear, today, said it's slashing 5,000 more jobs this year on top of the 4,000 it announced last year. The company also posted a worse-than-expected quarterly loss blaming lower industry demand undoubtedly related to the slump in auto sales. Goodyear shares right now are up three percent. The overall market, however, going in the opposite direction. But we're seeing just modest declines unlike yesterday. The blue chips, right now, down 11 points. The NASDAQ, meanwhile, is down two. Kyra, back to you.</s>PHILLIPS: All right. Susan, thanks. What to do about the war in Afghanistan? President Obama is sending in thousands more troops. Will that be enough? We'll go live to the Pentagon for answers.