Homeowner bailout? What can we expect?
On Tuesday (2/10/09), Treasury Secretary Timothy Geithner is expected to reveal the administrations plans for the $350 billion remaining in the financial industry bailout package. The federal government wants to set aside between 50 and 100 billion dollars of the money to address the foreclosure crisis, but exactly how that money will be spent remains to be seen.
Larry Summers, director of the National Economic Council wrote to congressional leaders last month that “We will implement smart, aggressive policies to reduce the number of preventable foreclosures by helping to reduce mortgage payments for economically stressed but responsible homeowners, while also reforming our bankruptcy laws and strengthening existing housing initiatives” . Summers also said that banks that receive bailout funds will be required to implement foreclosure prevention programs.
Looking beyond the bailout, it is likely the stimulus package will include a large tax credit for those buying homes. Additionally, Congress is looking to revamp the Hope for Homeowners program, which was originally designed to refinance struggling borrowers into government-backed Federal Housing Administration loans. Very few borrowers are showing interest partly because of its high fees. The hope is to make it more attractive by easing the terms for homeowners and providing incentives for servicers to participate.
Source: CNNMoney.com
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