
Government Works to Reduce Foreclosure Rate
[Dec 6, 2007.]
Members of Congress are calling for a renewed government effort to reduce the rate of home foreclosures in the country.
The risk of default is increasing, given the fact that some 2 million subprime mortgages will soon reset to higher monthly payments. As House Financial Services Committee Chairman Barney Frank said, "Speed is important. Time is of the essence."
Meanwhile, the head of the Federal Deposit Insurance Corporation has proposed a plan whereby mortgage companies would convert adjustable-rate mortgages to fixed-rate loans for those borrowers who are up to date on their monthly payments.
Treasury Undersecretary Robert K. Steel said the plan is being reviewed at this point. According to Steel, the government and trade groups have expanded toll-free hotlines in order to provide help to homeowners who are in danger of default. In addition, 200,000 letters are being mailed to at-risk homeowners. Steel has said that the Bush Administration is working "flat out" to deal with the housing slump.
"Under the President's leadership, the administration is working diligently to help mitigate the impact of rising foreclosures on homeowners and the economy," Steel said.
Meanwhile, some economists worry that the current housing crisis will lead to an all-out recession. It's been estimated that home loan defaults will increase to at least 2 million in the next 2 years in the subprime loan market. Subprime loans are those home loans that are offered to home buyers with shaky credit histories.
With a change in rates, homeowners with subprime mortgages could see their house payments increase as much as $300 a month.
Meanwhile, Iowa's attorney general has told members of Congress that he's working on an assistance plan for homeowners similar to that used in the '80s to help farmers who were in danger of losing their farms.
It's possible that the housing crisis could emerge as a key issue in the 2008 election.
Julie Ann Amos
December 6th 2007
Recent News
- Fed Cuts Interest Rate to Boost Housing
When the Federal Reserve Board cut its federal funds rate by a quarter of a percentage point, the goal was to correct the national housing slump. The rate decrease—the second in 6 weeks—is also designed to help keep recession at bay. [6th December 2007] - Gas Station Customers to Pay the High-Tech Way
Motorists in Chicago have a new, high-tech method of paying for their gasoline. [6th December 2007] - Mortgage Standards Become Stricter
A number of banks are becoming stricter when it comes to mortgage standards, according to the Federal Reserve Board, which recently released an interesting survey of the nation's banks.[21st November 2007] - Fed Poised to Cut Interest Rate
The Federal Reserve Board appears to be readying to slash a key interest rate. The much-anticipated move could offer relief to the housing market and credit industry, which have both been pummeled over the last few months.[21st November 2007] - Student Loans Considered a Good Kind of Debt
Analysts now say that student loans are considered a good type of debt. That's because a college education is classified as a worthwhile investment over the long haul. [21st November 2007] - Some Investors Expect Downturn in Commercial Real Estate Market
Not so long ago, investors predicted that the residential real estate market would suffer a significant setback. They were right on that score—the housing market is at its lowest ebb in some 16 years. [19th November 2007] - Slow Economy Hurts Hiring
Slow growth in the nation's economy is having an impact on holiday hiring. [19th November 2007] - Economic Concerns Cause Drop in Factory Orders
The U.S. Commerce Department reports that orders for big-ticket manufactured goods dropped last month amid new signs of economic turmoil. [19th November 2007]
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