Daily Real Estate News March 3, 20085
Proposals to Turnaround the Market
The word bailout isn’t popular in Washington, D.C., these days, so the efforts by both political parties to clean up the housing mess are all skirting the issue."Anything that can be described as a bailout is going to be dead-on-arrival, so how these proposals are framed is critical to whether or not they even have a chance at enactment," says Jaret Seiberg, a financial services policy analyst with Stanford Group. "It has to be framed as a short-term rescue for the housing market and the economy and not as a way to help individual lenders or investors."Here are the five most prominent plans for propping up, rescuing, freezing, and throwing a lifeline to the housing market:
Rep. Barney Frank: Give the Federal Housing Administration $15 billion to buy up loans and refinance them at lower rates, and give state and local governments $10 billion in grants to buy up foreclosed properties.
Sen. Christopher Dodd: Create a new Federal Homeownership Preservation Corp., funded with up to $20 billion, to purchase distressed loans and help struggling home owners to refinance.
Treasury Secretary Henry Paulson: Encourage the banking industry to freeze interest rates for five years for some borrowers, and give some home owners a 30-day reprieve from foreclosures.
Senate Majority Leader Harry Reid and other democrats: Let bankruptcy judges reduce the obligations of borrowers unable to pay their mortgages, and spend $4 billion to buy and fix up foreclosed homes.
Office of Thrift Supervision: Allow about 8 million home owners who owe more than their homes are worth to refinance into government-backed loans, giving lenders the ability to share some of the gains if the home is eventually sold at a higher price.Source: The Associated Press, Alan Zibel (03/02/08)
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