House Approves Aid for Homeowners

[Oct 26, 2007.]

The U.S. House last week approved a program designed to help homeowners to avoid losing their homes as a result of delinquencies on their loan payments.

The House approved the legislation by an overwhelming margin - 348-72. Under the plan, the Federal Housing Administration will back refinanced loans for homeowners who have fallen behind on their payments because of higher interest rates. According to an official with Housing and Urban Development, the legislation could impact more than 200,000 homeowners.

"This is a historic day for FHA," said Brian Montgomery, an assistant secretary for Housing and Urban Development. Meanwhile, the U.S. Senate has O.K.'d $200 million to groups which help homeowners avert foreclosure.

The aid packages may come just in time. RealtyTrac reports that the number of foreclosure filings in August were more than twice as high as the rate in August of 2006. More than 2 million adjustable-rate mortgages are expected to reset to higher interest rates over the coming year, increasing the risk of additional foreclosures. As a result, the housing crisis could emerge as a key issue in next year's Presidential contests.

The housing crunch, coupled with troubles in the financial markets, threatens to propel the economy into recession. The Federal Reserve tried, however, to reduce that risk by lowering a key interest rate by a half percent recently.

The real estate crisis is now apparently affecting every region of the country, although the problem may be most acute in the western part of the United States. Meanwhile, housing prices have also been plummeting, worsening the fortunes of home sellers.

Prospective home buyers are also struggling because of a tightening of the standards for home loans. Home shoppers with particularly shaky credit histories are being hardest hit due to the collapse of the subprime loan market. Subprime loans are those loans that are offered to home buyers with troubled credit histories.

Julie Ann Amos
October 26th 2007

Recent News

• Orders for Durable Goods Take a Tumble
  Orders for durable goods slid in August—the largest drop in 7 months. The downturn indicates that the country's industrial sector is facing hard times. [26th October 2007]


• Late Payments on Credit Cards Decrease
  Some encouraging financial news has emerged from the American Bankers Association. The group reports that late payments on credit cards decreased 4.39% in the 2nd quarter of the year. [26th October 2007]


• Cuts in Credit Card Rates May Be Slow in Coming
  Credit card holders across the U.S. may be breathing a sigh of relief, now that the Federal Reserve has decided to trim interest rates. However, it could be some time before credit card customers notice a change in their rates[17th October 2007]


• Credit Can Be Preferable to Debit
  Each pass through a supermarket checkout line is decision time for consumers, who must decide whether to use a debit card or credit card for cashless and check-free purchases.[17th October 2007]


• Home Price Plunge Continues
  Housing prices appear to be continuing on their downward slide. That's the word from the S&P/Case-Shiller home price index which was recently released. [17th October 2007]


• Cut in Key Interest Rate Has Immediate Effect
  The decision by the Federal Reserve to cut a key interest rate had an immediate impact on Wall Street. [16th October 2007]