FEDS PLAN TO DO 3 MILLION LOAN MODS
HOME LOANS, REAL ESTATE LEGISLATION, TIPS FOR BUYERS, TIPS FOR SELLERS
November 3rd, 2008
Inman News reported today that the Bush administration would like to allocate $500 billion for a loan guarantee program that could provide lenders incentive to modify up to 3 million at risk loans. Since the Feds role is providing insurance, the expected cost to taxpayers is $50 billion. Negotiations are underway between the Treasury Department and the Federal Deposit Insurance Corp (FDIC) to set the guidelines for the rescue which would be carried out under the Troubled Asset Repurchase Program or TARP.
Sheila Bair, Chairwoman for the FDIC, outlined this program during a congressional hearing last week as a key incentive to lenders to undertake loan modifications for troubled borrowers. The government would insure the loans against losses so the lenders would be willing to extend a helping hand to those wanting to keep their homes off the auction block.
She went on to say they are working “closely and creatively” with the Treasury Department to establish standards for loan modifications in order to prevent foreclosures. I have said over and over that stemming 
the tide of foreclosures is paramount to stabilizing the housing market. The sooner they implement these programs, for existing homeowners fretting over equity erosion, the better.
White House spokeswoman Dana Perino said the administration is reviewing several proposals stressing issues of fairness and protecting taxpayers. She went on to say these programs must have the right combination of taxpayer protections, significantly impact the housing crisis and be fair to homeowners in trouble.
Thus far, most of the federal government’s efforts have been focused on two loan guarantee programs-FHA Secure and Hope for Homeowners. These programs have targeted homeowners with mortgage delinquencies and defaults. Critics say these programs don’t help unless the lender is willing to write-down the principal balance to reflect current market value in order to allow the borrower to qualify for a fixed-rate refinance.
In order for Americans to regain confidence in our economy, I believe we must come together as a country after the upcoming election, realize savings from lower gas prices reflected in food and necessities and quickly implement a plan to rescue those homeowners with the desire and ability to keep their homes.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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