House Ready To Vote For Foreclosure Rescue Package
July 30th, 2008
It seems that differences have been ironed out and the house is ready to vote for a foreclosure rescue package. It will enable house owners under the cloud of foreclosures to avail of new affordable loans. Fannie Mae and Freddie Mac would also benefit from the bill in the form of cash infusion. It is hoped that these measures will calm the turbulent market lashed about by the foreclosure crisis. With voting completed on Wednesday it will become enforceable law this week.
The cooperation of the Bush administration and the lawmakers was behind the bill. Democrats gave it top priority. Federal help will be given from a fund of $3.9 billion for regions that have been worst affected by foreclosures. The priority of the Republicans was focusing on Freddie and Fannie with a view to assuring the market and boosting up badly eroded confidence.
The treasury department will now be empowered by the bill to support government sponsored mortgage companies with unlimited credit to enable them to buy up unspecified number of stocks. Freddie and Fannie would also be propped up – if and when required. The two jumbo mortgage houses either back or own $5 trillion of mortgages of the country. This is about half the total of the entire mortgages in USA.
It has been estimated that the rescue bill trying to temper the foreclosure crisis will cost $25 billion. But the hope is that it might not be needed ultimately.
The bill will primarily help those house owners who are trapped in the foreclosure net mainly because the value of the property has fallen below the amount of the loan. This does not permit them to refinance or sell. Now they have the chance of doing so – it will be an escape route from the quicksand of foreclosure. Lenders on their part would have to agree to waive a sizeable chunk of the original loan. By doing so they will avoid foreclosures, which in the long run turn out to be more costly.
The bill that will have tighter control over Freddie Mac and Fannie Mae is creating a new regulating body. The Federal Housing Administration would also be modernized.
Tax breaks to the tune of $15 billion inclusive of credit limit up to $7,700 for novice buyers who bought houses during a specified period are also on the cards. Itemization of taxes for deduction will also be permitted.
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August 1st, 2008 at 11:07 pm
Even though we are told of instances of foreclosure in terms of statistics, to so many, it’s a story of a family member or friend that they know.
I’m not sure who to blame - the owner who could’ve taken different actions to avoid foreclosure or the banks and government who do such a poor job of keeping homeowners informed with all their small-print info.
It’s a spiral where everyone is chasing and blaming someone else. But one thing that we all can agree on in difficult times like this is that it’s a downward spiral that is collectively drowning us as a whole nation that once was prosperous and less wounded.