From today's Wall Street Journal comes another possible program to assist the struggling housing market and those families a step or two away from foreclosure.
This plan would allow homeowners to receive federal loans to pay down as much as 20% of their principal. The plan was introduced by the Federal Deposit Insurance Corporation to help stem the rising tide of foreclosures.
The success of the program hinges on the willingness of mortgage servicers and investors to agree to restructure those loans in trouble, as well as to pay the financing cost of making a federal loan.
The FDIC believes that "only the federal government is in a position to help arrest the downward cycle in housing markets by facilitating temporary aid to borrowers facing financial difficulty and encouraging widespread restructuring of unaffordable mortgages."
The FDIC Chairperson, Sheila Bair, did acknowledge that the firms willing to service the program would receive some benefit. But those same firms would be required to cover the financing costs and would have to subordinate their own claims to the federal government if they choose to take part in the program.
Right now, the Bush administration, lawmakers, and industry and consumer groups are in the process of being briefed on the program by the FDIC. Ms. Bair states that she cannot foretell a response, but hopes the program will receive bipartisan support.
And I say - please pass this program and any other ones on the table to get this economy moving again!
So, 'til next time, it's all good!
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