Good Morning!
A blurb I read in yesterday's WSJ will not immediately turn the housing market around, but it's a small step in the right direction. It could set an important example as well.
In one attempt to help many borrowers stave off foreclosure, the Federal Reserve Board has created a program to modify mortgage loans tied to the debt the agency acquired in connection with the bailouts of failing investors in Mortgage Backed Securities, including American International Group and Bear Stearns. A total of $84 Billion in FED-held Mortgage Assets are involved here.
In a story by Wall Street Journal reporter Sudeep Reddy, the modifications could include a combination of lower interest rates, extended repayment terms, and perhaps even a deferral or reduction in due principal, in some cases.
Rising mortgage loan defaults continue to drive down the value of Mortgage Backed Securities. Experts fear a continued weakening in the mortgage market could further damage the stressed U.S. Banking System, and hamper efforts of a real economic recovery any time soon. President Obama and his administration is pushing for action to stem the rising tide of foreclosures. Congress, along with the Fed and the U.S. Treasury Department, plan to introduce their homeowner relief plan within weeks.
In mid-2008, the Federal Deposit Insurance Corporation had mixed success modifying mortgage loans they acquired when they took over failing sub-prime, no-doc lender IndyMac Bank of CA. The mortgage modifications served as short term relief for some, but many borrowers granted loan modifications fell back into arrears several months later.
See our post today @ BlogChicagoHomes.com.
DEAN & DEAN'S TEAM CHICAGO
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