Obama To Hand Out New Housing Aid
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Amid the high unemployment and job security concern, pressure is being felt in Congress to address the foreclosure crisis that is putting million of Americans at risk of losing their homes.
President Barack Obama and the White House administration will announce on Friday a broad series of new initiatives to help homeowners in a troubled housing market, including the potential refinancing of millions of home loans into government-backed securities that would provide lower payments.
Another key initiative could include aid for those homeowners that currently are unemployed or seeking a job, while also encouraging lenders to write down the value of loans held by borrowers in modification programs.
The new initiatives are likely to be the most controversial yet by the government to battle the U.S. housing crisis, as the Federal Housing Administration would be able to refinance loans for homeowners who currently owe more on their mortgage than the home is worth.
The problem arose during the housing boom when homeowners refinanced their loans to take cash out or were unfortunate enough to purchase at the peak. This is the problem for roughly 11 million household, or 20 percent of the total mortgages in the U.S.
The plan does come with added risk to taxpayers. It the plan does bring additional borrowers into FHA loans, another downturn in the housing market could send the agency into the red. The FHA already insures more than six million borrowers who are now underwater.
There is a possibility that the agency could use up to $14 billion in funds from the Troubled Asset Relief Program to fund the proposed initiatives, some of which could be use to garner favor with financial institutions to get their participation.
"The government is seeking to persuade people to stay in their homes by aligning the mortgage debt with the asset value, which is the only viable path to real housing stability," said one person familiar with the matter cited by a report in the New York Times.
President Barack Obama and the White House administration will announce on Friday a broad series of new initiatives to help homeowners in a troubled housing market, including the potential refinancing of millions of home loans into government-backed securities that would provide lower payments.
Another key initiative could include aid for those homeowners that currently are unemployed or seeking a job, while also encouraging lenders to write down the value of loans held by borrowers in modification programs.
The new initiatives are likely to be the most controversial yet by the government to battle the U.S. housing crisis, as the Federal Housing Administration would be able to refinance loans for homeowners who currently owe more on their mortgage than the home is worth.
The problem arose during the housing boom when homeowners refinanced their loans to take cash out or were unfortunate enough to purchase at the peak. This is the problem for roughly 11 million household, or 20 percent of the total mortgages in the U.S.
The plan does come with added risk to taxpayers. It the plan does bring additional borrowers into FHA loans, another downturn in the housing market could send the agency into the red. The FHA already insures more than six million borrowers who are now underwater.
There is a possibility that the agency could use up to $14 billion in funds from the Troubled Asset Relief Program to fund the proposed initiatives, some of which could be use to garner favor with financial institutions to get their participation.
"The government is seeking to persuade people to stay in their homes by aligning the mortgage debt with the asset value, which is the only viable path to real housing stability," said one person familiar with the matter cited by a report in the New York Times.
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