The White House released a statement today saying that it would be helping to lower mortgage payments by backing those who are in need. These new measures are geared towards resolving the foreclosure crisis, potentially helping home owners who have loans for more money than their homes are worth.
The Administration avowed that no new tax money would be used to aide, and that the funds would be drawn from the $50 billion in the Troubled Asset Relief Program. About a fifth of the households with mortgages in the U.S., roughly 11 million, are in the position to benefit from having a government backed loan. Many refinanced their homes before the housing bubble burst, while others just bought at the acme of home prices. Today these people are “underwater,” meaning they owe more than they are worth.
This proposal also helps the unemployed through requiring lenders to forgive debts for a few months for those receiving unemployment assistance.
To keep foreclosures down, the government is attempting to realign mortgages with asset values. Last quarter, foreclosures were up 9% to more than a quarter of a million.
This new deal is supposed to balance and stabilize the housing market in order to effectively end the recession.