Half of the $700 billion bank-bailout may be deployed to stem foreclsoures and the Hope Now Alliance expects to modify two million mortgages in 2009. For more information, read the following article from Property Wire.
The U.S. mortgage industry aims to increase help to property owners in 2009 in a bid to prevent a huge increase in foreclosures.
The intention comes at a time when the Democrats and other politicians are calling for taxpayers’ money to be used to ease the foreclosure crisis.
The Hope Now Alliance, a group created at the behest of Treasury Secretary Henry Paulson last year, announced that it expects to modify about two million mortgages next year.
The group, which includes JPMorgan Chase, Citigroup and Bank of America, also plans a new campaign to boost participation in the programme. Democrats have repeatedly dismissed the effectiveness of Hope Now, the Bush administration’s main initiative on mortgages.
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Top finance lawmakers plan legislation early next month that would deploy the second half of the government’s $700 billion bank-bailout fund to stem foreclosures.
Hope Now estimates that about 2.2 million foreclosures will have been prevented this year, bringing to three million the total averted since the programme began in 2007 but it says it is not complacent.
"We have to buck up and be smarter and faster and more effective going forward because the problem hasn’t gone away," said Faith Schwartz, the alliance’s director.
But independent experts point out that more dramatic intervention is needed.
Voluntary modifications by mortgage lenders are too little, too late, according to Nicolas Retsinas, director of Harvard University’s Joint Centre for Housing Studies in Cambridge, Massachusetts. As mounting job losses cause foreclosure rates to rise, "we clearly need a more activist government intervention," he said.
The Hope Now programmes are voluntary and privately funded. Critics say they don’t go far enough to stem the housing crisis, which has mushroomed into a broader wave of economic distress.
The U.S. economy may shrink more than six per cent in the last three months of this year, the worst performance in a quarter century, private forecasters are projecting.
Paulson exhausted the first half of the fund, known as the Troubled Asset Relief Programme (TARP), last week with $13.4 billion of loans to prevent General Motors and Chrysler from collapsing in coming weeks. The Treasury used most of the rest for injecting capital into banks, after abandoning an original plan to purchase mortgages and related securities.
This article has been reposted from Property Wire. View the article on Property Wire’s international real estate news website here.