Bush To Reveal Plan To Relieve The Mortgage Market
Aug 31st, 2007 @ 6:40 AM by Alden Smith
With over 100 mortgage lenders out of business, and hedge funds, pension funds and many investors expected to lose more than $100 billion, Washington has finally decided to step in and help bail out the economy. President Bush, in his first response to the sub-prime crisis, is expected to reveal his plan today to help the Americans with credit problems meet the rising costs of home loans.
President Bush will propose that the Federal Housing Authority (FHA), a branch of the Department of Housing & Urban Development(HUD), will make changes to its policies and allow an additional 80,000 people with less than perfect credit sign up for the FHA program. An expected 160,000 prospective homeowners are expected to use FHA financing this year and next. According to the New York Times, One Washington official has called a portion of Bush’s plan a “jawboning of lenders” to persuade them not to foreclose on home owners.
Bumps in the Road?
This comes at a time when House Democrats have been pummeling President Bush to take action. His proposal will require some legislative action, and President Bush will need to win over the Democrats to put his plan into place. A nervous stock market is also concerned about the timing of the announcement, feeling that investors and buyers will be second guessing Mr. Bush, and will then cause further volatility in the market place. According to the New York Times, one senior official has stated that the main objective of this new plan is not to affect the stock market, but to help low income homeowners in distressed geographical locations. these locations include Ohio and Michigan. this official said “The primary focus is to help individuals who have an opportunity to stay in their homes to stay in their homes. The subprime mortgage situation is having a crushing effect on a lot of communities right now.”
Where Will This Lead Us?
The plan appears to be a solid one. Other proposals are in the works right now to help with the devastating effect that the sub-prime market has had on the market. I feel that the biggest obstacle to this proposal will be Democratic opposition to anything President Bush comes up with. We must hope that this isn’t dragged through the House and changed so drastically that no one will be helped. Bush is to be applauded for his efforts. Let’s see who agrees…