San Fernando Valley Homeowners Hoping Obama Re-Fi Plan Will Stabilize Plunging Home Prices

NORTH HOLLYWOOD (CBS) — A slumping housing market in the San Fernando Valley could soon get a much-needed boost from a proposal by President Barack Obama to make it easier for struggling homeowners to refinance their mortgages.

KNX 1070's John Brooks reports even new home buyers are few and far between as prices continue to plummet.

Home prices fell another 7 percent in 2011, while home sales also dropped 7 percent -- almost down to the record low seen in 2007 -- according to the Southland Regional Association of Realtors.

Condo sales didn't fare much better: sales inched up about 1 percent last year as the median price for condominiums tumbled to $219,000.

Some buyers have skirted the increasingly stringent lending process altogether and purchasing their home the old-fashioned way.

"I only know one friend that's bought a new anything in the last three years, and she saved up for that for quite a while, and she paid it all cash," said one resident.

Homeowners who are facing a sharp adjustment in their mortgage payments are still holding out hope that Obama can convince Congress to pass a nationwide program that would allow qualifying homeowners to refinance at lower interest rates.

"I think that'll help, because my mortgage is going to become adjustable in three years and I don't have any choice because it's through Wells Fargo," said another man.

Wells Fargo announced a new $10 billion program aimed at stabilizing underwater mortgages and helping  potential buyers with their down payments.

The president's plan would allow all homeowners who are current in their payments to take advantage of rates 4 per cent or below, potentially saving them as much as $3,000 every year.