A new plan to avoid foreclosures
The federal government is working on a new plan to help struggling homeowners avoid foreclosure. This would be paid for through the $700 billion rescue package finalized by Congress. Nancy Marshall Genzer has more.
For sale signs are posted in front of homes in Richmond, Calif. (Justin Sullivan/Getty Images)
More on Housing - Real Estate, America's Financial Crisis
TEXT OF STORY
Steve Chiotakis: Here at home, new jobless claims didn't budge last week, remaining at the same elevated level due to the struggling economy. We're getting word of a new government proposal as well to help struggling homeowners avoid foreclosure. The money would come from that $700 billion financial bailout package. But the proposal is already being scrutinized by economists, as Marketplace's Nancy Marshall Genzer reports.
Nancy Marshall Genzer: Details of the program are still being worked out. But it is expected to provide government guarantees for about $500 billion worth of mortgages. Three million homeowners might quality for more affordable loans based on their ability to repay.
Nariman Behravesh is chief economist for IHS Global Insight. He says this is a good first step.
Nariman Behravesh: If we don't throw a lifeline out to the people who are in effect are at the heart of the problem, mainly that they can't afford to pay their mortgages and therefore are walking away from them, and in so doing, pushing down home prices -- if we don't address that, then this problem goes on for a lot longer.
Under the plan, the government would provide incentives to mortgage lenders to change the terms of loans. The cost would be shared with the government. Uncle Sam could pay up to $50 billion.
In Washington, I'm Nancy Marshall Genzer for Marketplace.
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