Home Front

A blog about the economy and the Sacramento-area real estate market.

September 28, 2008
The federal rescue plan offers a hand to struggling borrowers
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I have finally gotten onto the U.S. House Financial Services Committee Web site to see the bill being proposed for bailing out Wall Street financial firms by taking mortgage backed securities off their books.

It's been very difficult to get onto the site, with millions of others around the world wanting to take a look. (What a cool breakthrough in participatory democracy, by the way, to see this proposed legislation so quickly after being written and finalized).

So first off, here is a quick analysis of what the bailout bill aims to do for people headed toward foreclosure. It's hard to say yet how much of a difference this will make for Sacramento-area borrowers sliding toward the abyss. But it does offer more hope than they had this morning, I think. I can't tell you the number of people I have talked to on the phone in recent months, urging them to hang in there if they can, for the likelihood of more help being on the horizon as this progresses.

Here is the analysis of what everyone in negotiations agreed to on that front:
 
 Section 109. Foreclosure Mitigation Efforts.

For mortgages and mortgage-backed securities acquired through TARP, the Secretary must implement a plan to mitigate foreclosures and to encourage servicers of mortgages to modify loans through Hope for Homeowners and other programs. Allows the Secretary to use loan guarantees and credit enhancement to avoid foreclosures. Requires the Secretary to coordinate with other federal entities that hold troubled assets in order to identify opportunities to modify loans, considering net present value to the taxpayer.

Section 110. Assistance to Homeowners.
Requires federal entities that hold mortgages and mortgage-backed securities, including the Federal Housing Finance Agency, the FDIC, and the Federal Reserve to develop plans to minimize foreclosures. Requires federal entities to work with servicers to encourage loan modifications, considering net present value to the taxpayer.

Finally, here is the entire bill released earlier this afternoon. This is likely to be one of the more historic financial documents in the history of the United States.

Here is a quick one-page summary.

And here is a more detailed section by section analysis.
 
I expect we'll we taking a closer look at all this tomorrow for reports in Tuesday's paper.

Image of Capitol Hill: patentdocs.net

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