The plan is pretty straight forward.
Bankruptcy judges can modify loan terms and lenders will get assistance if the agree to modify existing loans so people aren’t paying more than their homes are worth.
Obama intends to make loan modifications the centerpiece of plan that also gives bankruptcy judges more power to help borrowers keep their homes, said people familiar with the matter. Obama, in Phoenix on the second stop of a two-day swing through the U.S. West, will announce details at 10:15 a.m. local time as he campaigns for his economic recovery package, deputy White House spokesman Jen Psaki said.
â€œWe must stem the spread of foreclosures and falling home values for all Americans and do everything we can to help responsible homeowners stay in their homes,â€ Obama said yesterday in Denver, where he signed legislation providing $787 billion in spending and tax cuts intended to revive the economy.
Record foreclosures in the past year are swelling the glut of properties on the U.S. market, forcing down home values and undermining homebuildersâ€™ efforts to revive demand and lighten inventory by cutting prices. The housing market lost an estimated $3.3 trillion in value last year and almost one in six owners owed more than their homes were worth, online data provider Zillow.com said Feb. 3. The U.S. economy shrank 3.8 percent in the fourth quarter, the most since 1982.
So where is the money coming from?
The existing TARP funds…
The administration on Feb. 10 presented an overhaul of a $700 billion financial rescue plan, passed last year under former President George W. Bush, to shore up bank balance sheets and revive lending to businesses and consumers. The Treasury Department will use the remaining funds, at least $50 billion, on the housing relief plan to prevent millions of foreclosures, said a Democratic official briefed on the plan.
Here’s CBS’ story and Eric Cantor’s response…
I think Cantor’s point that “93% of America’s families are current on their mortgages” is probably the most telling statement about how he doesn’t get this problem. Just because your mortgage is current doesn’t mean you aren’t seriously struggling to make payments. And it doesn’t mean that your loan isn’t worth more than the value of your house. I bet a fairly significant number of those 93% Cantor cites are in either or both of those situations and not because they’re speculators.
Cantor and the GOP have to get a new schtick if they want to stay relevant. They can’t just be opposed to everything this President is going to do, especially when he’s not even asking for any additional money right now.