Obama Administration to Announce Details of Plan to Stem Foreclosures on Mortgage Loans

04/17/09

The President purposefully chose Florida to endorse the new stimulus plan and specifically visited Fort Myers. Fort Myers is one of the areas of the country hardest hit by the real estate crash. But Fort Myers is just one of many cities feeling battered by the ailing housing market and the credit crisis. The rate of foreclosures on mortgage loans are the highest this country has ever seen. Many people were lured into purchasing more than they could afford during the real estate boom, as almost anyone who wanted credit could get it. Plenty of people, however, obtained reasonable mortgage loans they could afford and are now suffering from a drop in values and the unsteady economic times. The Obama Administration has made it clear that a big part of its new economic stimulus bill will go toward boosting the housing sector.

The specific points of that plan have yet to be made public, but the administration has vowed to focus on helping both homeowners with mortgage loans and lenders through this crisis. The Treasury Secretary has said that plans to boost the housing sector must include lowering payments on mortgage loans for those struggling with them. It has long been said that it is more financially beneficial for lending institutions to restructure mortgage loans than to have them go into foreclosure. Lawmakers, lenders and representatives from the housing sector have been brainstorming solutions that might help to decrease foreclosures and delinquencies. Some ideas that have been discussed are reducing interest rates on mortgage loans and deferring the principal on mortgage loans until the end of their terms. Regardless of the strategy, the focus is on helping those with mortgage loans that are not commensurate with their earnings. The President would like to support troubled homeowners before they foreclose on their mortgage loans.

Phoenix is the city chosen to be the backdrop for the President to release the specifics of the economic plan to help the housing market. Arizona, like Florida, is one of the states hardest hit by declining home values and increasing foreclosure rates. Consumers and businesses appear to be at a stand still, as they wait to hear the details of government plans to help jump start the housing market and stem delinquencies on mortgage loans. Many banks have, in fact, decided to shelve foreclosures until the beginning of March, as they too wait to hear how the stimulus plan will affect their business.

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