government to subsidize home mortgages

NEW -> Contingent Buyer Assistance Program

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<blockquote>

<strong>Obama eyes home loan subsidies in rescue plan: sources</strong>



Thursday February 12, 2009, 3:47 pm EST



By Patrick Rucker



WASHINGTON (Reuters) - The Obama administration is hammering out a program to subsidize mortgage payments for troubled homeowners who have gone through a standardized re-appraisal and affordability test, sources familiar with the plan said on Thursday.



The program would be a major break from existing aid programs, which are triggered once homeowners fall into arrears.



Under the plan being contemplated, mortgage companies would use a uniform eligibility test even before a borrower becomes delinquent, sources said.



The administration hopes the mortgage industry will soon agree to a set of standards that will allow it to move quickly to modify many home loans.



Sources said government-controlled housing finance companies Fannie Mae and Freddie Mac would play a supporting role in the government's new plan, but said they are not expected to expand their securitization of loans.



In an interview, James Lockhart, the regulator that oversees Fannie Mae and Freddie Mac, said the mortgage finance industry was eager to have a standardized mortgage modification standard.



"I've talked to all the major servicers -- both the big bank ones and the big independent ones -- and they are all ready to go, they're chomping at the bit," Lockhart, the director of the Federal Housing Finance Agency, said. "The other thing they're asking for standardization."



Under the plan being mulled, homeowners would have to make a case of hardship to qualify for new loan terms.



Housing policymakers weighed but have for now shelved one plan that would have seen the government stand behind low-cost mortgages of between 4 and 4.5 percent, sources said.



Lockhart said that policymakers are eager to prevent a large drop in home values from their current, deflated levels.



"Just as we had a large overshooting to the upside. Is there any way to prevent going much further to the downside? That will cause tremendous harm to the U.S. economy, to the financial system and it's not necessary," he said.

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Henry Morgenthau, Franklin Roosevelt's Treasury secretary, addressed to Congressional Democrats in May of 1939:



<em>"We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong ... somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises ... I say after eight years of this Administration we have just as much unemployment as when we started ... And an enormous debt to boot!"</em>
 
Maybe Geithner can get some help from the new government subsidization plan:



<em>The couple bought a home in the Washington suburb of Bethesda, Md., in 1992 for $275,000, taking a mortgage of $202,300. Through a series of refinancings and the sale of two properties, they climbed the economic ladder until they bought a house for $1.6 million in Larchmont, N.Y., in 2004.



All of the Geithners' mortgages - from big banks including Nationsbanc, which is now Bank of America; Chase Manhattan, which is now J.P. Morgan Chase; and Wells Fargo - carried adjustable-rate mortgages with the risk that annual rate increases could raise their interest payments to as much as 11.25 percent, though the couple tended to refinance or sell their homes before they faced a rate adjustment.



They also took out second mortgages, now known as home equity lines of credit, borrowing a total of nearly $1 million in 2002 on their second Bethesda home, which they bought a year earlier for $1,085,000.



In 2004, they sold that house for $1.45 million and bought their current house in the New York suburb of Larchmont with a $1 million Wells Fargo mortgage, later adding a $400,000 home equity line of credit, also from Wells Fargo. </em>



<a href="http://74.125.47.132/search?q=cache:UK3znB2v_kgJ:www.miamiherald.com/news/politics/AP/story/863936.html+geithner+mortgage+adjustable+rate+westchester&hl=en&ct=clnk&cd=3&gl=us">Geithner's mortgage</a>
 
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