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Stall in housing market threatens economy
Stall in housing market threatens economy
By Alan Zibel

updated 7:35 p.m. CT, Wed., March. 24, 2010
 
WASHINGTON - The recovery in the housing market is at risk of collapsing.
Home sales are sliding, prices are stalling and foreclosures are rising. And mortgage rates are likely to go up after next week, when the Federal Reserve ends a program that has driven them down.
The trend could threaten the broader economy, economists warn. People whose home equity is stagnant or shrinking are less likely to spend freely.
In a move that will help at least some homeowners avoid foreclosure, Bank of America unveiled a $3 billion plan Wednesday to help some of its most troubled borrowers. It said it will forgive up to 30 percent of their total mortgage balance. About 45,000 borrowers are expected to qualify, the bank said.
The plan is part of an agreement the bank reached in 2008 with state attorneys general involving high-risk loans made by Countrywide Financial Corp. before Bank of America acquired it.
Still, it's the first time a lender has announced a broad plan to reduce mortgage principal when home values drop well below the amount owed. Bank of America collects ... more

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