Subprime Help
Interestingly, the Bush administration, staunch market followers and rabid Republican small government defenders, has remarked that the government would work to "modernize and improve" the Federal Housing Administration "by lowering down payment requirements, by increasing loan
limits and providing more flexibility in pricing." Has the Republican Party decided that government is not the enemy of the common man? Probably not, however political expediency will rule this day. It is
fascinating to watch the Republican Party "flip flop" on whether the government should intervene on behalf of the people in the US who are suffering from mortgage woes.
©2007 Angel Reyes
www.ReyesLaw.com
limits and providing more flexibility in pricing." Has the Republican Party decided that government is not the enemy of the common man? Probably not, however political expediency will rule this day. It is
fascinating to watch the Republican Party "flip flop" on whether the government should intervene on behalf of the people in the US who are suffering from mortgage woes.
Fed asks mortgage-servicers to help borrowers
By Robert Schroeder, MarketWatch.com
Last Update: 12:37 PM ET Sep 4, 2007
WASHINGTON (MarketWatch) -- Regulators including the Federal Reserve asked banks and other institutions Tuesday to pursue "loss mitigation" strategies for borrowers at risk of losing their homes, the latest move from Washington aimed at defusing the crisis in the subprime mortgage market.
In a statement, the Fed said many subprime and other mortgages have been transferred into securitization trusts governed by pooling and servicing agreements.
The regulators encouraged banks to help borrowers within those agreements. Regulators said banks could work out loan modifications, deferral of payments or a reduction in principal.
"We encourage servicers of securitized mortgages to reach out to financially stressed homeowners," said Federal Reserve Governor Randall Kroszner. "Keeping families in their homes is a matter of great importance to the Federal Reserve."
The regulators also said that banks and other institutions should consider referring borrowers to counseling services which may help them avoid foreclosure.
The announcement from the Fed, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and other regulators follows a pledge made Friday by President Bush to help homeowners hit by the subprime implosion. Bush unveiled a series of steps, including allowing refinancing into government-insured mortgages.
However, Bush hasn't endorsed a bailout of homeowners.
Lawmakers are mulling other steps to come to borrowers' rescue, including bolstering the roles of the Federal Housing Administration and of mortgage-buyers Fannie Mae and Freddie Mac.
About two million adjustable rate mortgages are scheduled to reset by the end of next year. Monthly payments will rise from low introductory rates and hit many borrowers hard.
The downturn in the housing market is also playing out in construction spending, which may in turn take a bite out of U.S. economic growth. On Tuesday, the Commerce Department reported that spending on U.S. construction projects fell 0.4% in July to an annual rate of $1.17 trillion, with a decline in private residential projects responsible for the downturn.
It was the 17th consecutive monthly decrease in home construction spending.
End of Story
Robert Schroeder is a reporter for MarketWatch in Washington.
©2007 Angel Reyes
www.ReyesLaw.com
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