CHAPEL HILL – Mortgages remain one of the most important issues to homeowners and one of our local professors says President Barack Obama’s plan for mortgage reform is a good move.

President Obama recently said that he wants more lenders to offer 30-year mortgages to individuals buying a home.

Director of UNC’s Center for Community Capital and professor and chair of the department of city and regional planning at UNC, Roberto Quercia, explains that 30-year mortgages differ from interest-only mortgages because they allow borrowers to pay less interest and more capital over time.

“It’s a great mortgage instrument for low-to-moderate income families because it allows them to buy a house, and at the same time, pay back the loan and build equity, build wealth, along the way,” Quercia says.

President Obama says he wants these types of loans to be handled by private lenders and move away from federally-chartered private lenders like Fannie May and Freddie Mac. Quercia says that the federal government does not want to be in another situation like in the 2008 financial collapse where Fannie and Freddie’s losses were passed onto taxpayers.

“That issue of private profit, public losses was something President Obama wants to avoid in the future,” Quercia says.

Last year, President Obama also made pushes for more borrowers with more debt than the value of their home, or “underwater” homeowners, to refinance to a better interest rate. In this speech, Quercia says the President made a new proposal, urging lenders not to deny loans to individuals with bad credit scores.

“Somehow, he wants lenders to take into account that if you’ve got a blemish in your credit because of unemployment that was no fault of your own, but because of the bigger, broader crisis, somehow, once that borrower gets a new job, they should be able to refinance,” Quercia says.

Quercia says he thinks the President’s proposals will probably work, but that there weren’t enough details in the speech to know for sure.

“Also, many of those initiatives will require the involvement of Congress, and obviously, the politics of this are such that it is unclear what the ultimate program or initiative will look like,” Quercia says.

President Obama gave his speech in Phoenix, Arizona, where many homes rapidly lost their value in the immediate wake of the housing crisis.