Foreclosure Rates on Mortgage Loans Focus of Real Estate Stimulus Plan
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by: marciafreeman
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President Obama was in Fort Myers, Florida the second week of February to promote the new economic stimulus bill. Fort Myers is one of the areas of the country hardest hit by the real estate crash. But Fort Myers is just one of many cities feeling battered by the ailing housing market and the credit crisis. Mortgage loans are being foreclosed at record levels. Many people were lured into purchasing more than they could afford during the real estate boom, as almost anyone who wanted credit could get it. Other responsible consumers who took on mortgage loans within their means are now grappling with decreasing home values, unemployment and reduced retirement portfolios. The new President has pledged to lend a big hand to the beleaguered real estate market through the stimulus plan.
Although the details of the stimulus bill have not been announced, it is expected that any plan will include assistance for consumers struggling with their mortgage loans and incentives for lending institutions. Secretary of Treasury, Timothy Geithner, told the Senate Banking Committee that any plan to address the struggling real estate market will center around bringing down monthly payments on mortgage loans. Foreclosures on mortgage loans can be more costly to banks and investors than modifying those loans. So the administration has been meeting with banks and housing industry groups to come up with strategies to stem foreclosure rates. Some ideas that have been discussed are reducing interest rates on mortgage loans and deferring the principal on mortgage loans until the end of their terms. These tactics are all aimed at lowering the monthly payments for consumers whose incomes do not support their current mortgage loans. The President would like to support troubled homeowners before they foreclose on their mortgage loans.
President Obama is expected to announce the details of the plan to boost the ailing housing sector next week in Phoenix, Arizona. Arizona, like Florida, is one of the states hardest hit by declining home values and increasing foreclosure rates. Consumers and businesses appear to be at a stand still, as they wait to hear the details of government plans to help jump start the housing market and stem delinquencies on mortgage loans. Many banks have, in fact, decided to shelve foreclosures until the beginning of March, as they too wait to hear how the stimulus plan will affect their business.
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