FOR 3 MILLION HOMEOWNERS Feeling the Pinch - Help is Coming!
PART OF $700 BILLION U.S. RESCUE PLAN, GOVERNMENT WOULD SHARE PORTION OF BANKS' LOSS IN LOAN MODIFICATIONS!
In some parts of Chicago we serve, the Homes-For-Sale Inventory exceeds 15 months. Those selling because the HAVE TO - mainly, due to the fact they can't afford their mortgage payments often find themselves in a very tight bind.
Many now own houses with values less than their current mortgage balance - a situation many Realtors and Lenders refer to as "under water" or "upside down." Of these, a few took out Adjustable Rate Mortages within the last few years, and these initially-affordable rates have or are about to reset into higher-rate, harder-to-afford home loans.
A new proposal by the U.S. Treasury Department and the Federal Deposit Insurance Corporation (FDIC), however, could help as many as three million homeowners that find themselves unable to keep up their house payments. It would allow certain borrowers to refinance their loans at more affordable rates and payments, and potentially help many save their homes.
The plan is estimated to cost between $40 and $50 Billion, with funds coming from the $700 Financial Bailout Plan passed by Congress a couple of weeks ago. By agreeing to share bad mortgage losses with banks, this proposal would be the most far-ranging plan yet to address rising home foreclosure rates, here in the Chicago area, and elsewhere across the U.S.
According to Corinne Hirsch, from the White House Office of Management and Budget, the program "is currently in a White House policy process," suggesting it's in the final stages of review. U.S. Treasury spokesperson Jennifer Zuccarelli acknowledged "the administration is looking at ways to reduce foreclosures."
Many consider the U.S. Housing Market decline to be the key component in the current credit crisis across the country. Sheila Bair, FDIC Charmain, has long advocated direct government intervention to reduce foreclosures. She feels a strong action by the Fed is necessary to prevent continued downward pressure on the housing market - and to help homeowners remain in their homes.
"Everyone in Washington now agrees that more needs to be done to help homeowners," Chairman Bair said at a conference last Wednesday.
The recently-passed Troubled Asset Relief Program, as the Bailout Plan is more formally known, requires the U.S. Treasury Department to step in and help homeowners avoid home foreclosure. According to MoodysEconomy.com, as many as 7.3 Million U.S. Homeowners are expected to default on their mortgages by 2010. They estimate as many as 4.3 Million may actually lose their homes to foreclosure.
For more info, read Michael R. Crittenden and Jessica Holzer's story in the October 30th edition of the Wall Street Journal.
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