A Break for Borrowers?

The chairman of the Federal Reserve, Ben Bernanke, has called for mortgage lenders to reduce the principal of mortgage loans for those homeowners who owe more than their homes are worth.

In essence he is asking banks to relinquish some of their income from loans in order to stop additional foreclosures.  This would be a voluntary effort that he sees to be in the banks' long-term self interest, as compared to some calls for a government-ordered rescue of defaulting borrowers.

He also suggested that the Congress and the President expand the authority of the FHA to help borrowers refinance sub-prime mortgages "beyond current proposals," but was not more specific about what he has in mind.

I'll be looking for a more clearly defined proposal....

 
Posted by Ibi Sofillas on 03/04/2008 02:44 PM   Comments (6)   , , , ,  

6 Comments on A Break for Borrowers?

It will be interesting to see if any banks care enough to follow thru since they suggested it and did not make it mandatory.

03/04/2008 02:54 PM by DeAndrea "Dee Dee" Jones The Hampton Roads Real Estate Lady! (Wainwright Real Estate)

This may stop some people from walking away - I am really surprised at his suggestion though!

03/04/2008 02:54 PM by Mary Aguilar (John Saar Properties)

I think they are realizing how bad things have gotten in the real estate business,but it make me wonder if this will not happen again when the market fires back up in a few years.

03/04/2008 03:11 PM by Canton Georgia Real Estate--- Dwayne West (Atlanta Real Estate)

I think its all a knee jerk reaction. Its too little too late. Those who really need the help aren't getting it. I don't really think they can mandate something like that because it will alienate alot of investors and banks, but we'll see....

03/04/2008 03:16 PM by Ken Henderson (Superior Mortgage)

IF banks start doing this then people start losing jobs. 

I am all about helping folks out that deserve it but not at the expense of creating an entire new wave of unemployed bank and mortgage related folks in the process.  We own homes and need to make our payments too.

03/04/2008 03:29 PM by Nathan Scott (TBD)

Hi Iba

What a great post. Some buyers, in fact lots, will need all the help they can get.

Sincerely

Tom Braatz

03/04/2008 08:27 PM by Tom Braatz, South Eastern Wisconsin (Tom Braatz)

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Real Estate Agent: Ibi Sofillas (MyRealtyTeam Real Estate, LLC)
Ibi Sofillas
Clarksburg, MD
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MyRealtyTeam Real Estate, LLC

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