Foreclosures Part of New Bailout Plan

The US Treasury Department announced through its secretary Timothy F. Geithner that foreclosures will be a big part of the new administration’s bailout plan to aid the ailing economy. The original fund amount to $350 billion, and is still likely to increase in case some programs become unsuccessful.

Geithner said that the plan includes the following actions: 1) High-risk bank assets are to be purchased by the government; 2) A Federal Reserve program will be expanded to be able to accommodate more student, auto and other consumer loans; 3) The government will extend help and support to the nation’s largest banks to help them survive the crisis and still be able to serve their clients; 4) Through rescue funds, the continuously increasing number of foreclosure properties will be stemmed.

The fourth plan directed at rescuing homeowners facing foreclosure is said to be revealed at the end of the week, according to some Congressional sources. Moreover, this program is going to use $50 billion, part of it directly coming from the Obama administration.

According to James B. Lockhart III, director of the Federal Housing Finance Agency, the new administration under president-elect Barack Obama is already planning and developing the proposal to stem foreclosures by modifying mortgages and giving more considerations to lenders and homeowners.

The government’s upcoming program on assisting homeowners who are facing the risks of having foreclosed homes includes measures that consider both the lender and the borrower. For instance, borrowers may still be considered when they’re applying for a loan if they missed only one payment. Also, lenders may choose to reduce payments according to the loaner’s or homeowner’s income.

Lockhart further stressed the need to act on the current economic situation. Since foreclosures is seen as one of the heaviest burdens hindering the country form recovering from its situation, he says that it is important that everyone, from all sectors and all sides involved should do their part. President Obama also tackled the issue in a recent news conference, saying that the country should cooperate and be patient until the government has resolved the current economic situation.

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