Eureka Capital Investments
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U.S. housing bailout plan to be announced next week
A housing rescue plan being considered by the Obama administration could strike at the heart of the credit crisis but its scale, complexity, and the potential for controversy poses challenges for policymakers.
The plan is due to be announced by President Barack Obama on Wednesday and is expected to break new ground by helping troubled borrowers even before they miss a mortgage payment.
If it works, officials will have a standardized approach to quickly determine whether a borrower is in trouble, revalue the home, and set new mortgage terms under a program that could help contain losses for banks that have incurred huge losses on bad housing investments.
The hope is that a uniform standard will do two things: give legal cover to rewrite loan terms and provide a universal template to quickly churn through the rolls of troubled borrowers. Mortgage servicers, the companies that collect a borrower’s monthly payments, are often hamstrung by contracts and cannot loosen loan terms. See full article