dcsimg
   Facebook


rebuild.org finance news:

Back to Latest News Headlines

Treasury Department Plan May Offer Limited Aid

[Feb 7, 2008.]

 

There are growing indications that the homeowner bailout plan offered by the U.S. Treasury Department may have a limited effect.

A non-profit group called the Center for Responsible Lending says that the Treasury plan will aid only 3% of subprime homeowners with their adjustable-rate mortgages.

The plan calls for freezing interest rates on adjustable-rate mortgages. However, the Center for Responsible Lending says only about 118,000 of 3.7 million homeowners nationwide would be eligible for the plan.

In its statement, the Center said, "The Treasury plan will be a welcome relief for those it helps, but given the magnitude of today's economic woes, the plan won't help nearly enough to avoid further widespread economic damage from foreclosures."

Statistics show that, for every loan modification by a lender, there are seven foreclosures. The stats are even worse for subprime loans. With subprime adjustable-rate mortgages, there are 13 foreclosures for every one loan modification.

Meanwhile, an official with the Center for Responsible Lending said Congress should permit bankruptcy judges to change the terms of home loans in order to prevent foreclosures. Such a plan is being debated in the House and Senate, but it is strongly opposed by the banking industry.

"Congress has the power to prevent up to 600,000 homes from being lost to foreclosure, at no cost to the national Treasury," said Eric Stein, senior vice president of the Center for Responsible Lending. "We urge Congress to pass this necessary legislation, both for homeowners and the nation's economy."

The housing market is experiencing its worst slump in some 16 years. Not only have foreclosures been numerous, but housing prices have plummeted as well. So far, the housing mess has not led to an all-out recession, but there are increasing fears that that could happen. As a result, officials in Washington are redoubling their efforts to jump-start the nation's economy.

Julie Ann Amos
Febraury 7th 2008

Recent News

 

news subscription:

Easily subscribe to the rebuild.org news feed.

Read our news without even visiting our site!

Feedburner
Subscribe to our news

 

news archive:

Rebuild.org monthly news archive