The Obama Administration unveiled a new plan today aimed at propping up the housing market by giving state and local housing finance agencies (HFAs) access to more resources. Housing agencies are finding it difficult to help families obtain housing, because they can’t raise money from investors. The agencies haven’t been able to help as many families since credit markets tightened up, which is why this new plan is needed.
The new plan from the Obama Administration has two parts; both involve bonds as well as Fannie Mae and Freddie Mac. Part I – the Treasury purchases securities from Fannie Mae and Freddie Mac, these securities are backed by new bonds issued by state and local HFAs. Part II – is a credit and liquidity program, which will give housing agencies access to more credit sources for existing bonds. Both programs are temporary and designed to provide agencies with relief until they can once again rely on market sources.
The new housing plan is designed to give state and local HFAs the ability to raise funds so that they can help struggling families get into homes. The government hopes that the plan will help hundreds of thousands of working families get affordable mortgages and help fuel the development of more rental units. In a nutshell, it will help less fortunate families buy homes, refinance existing loans or get into rental properties.
What are your thoughts on the new plan? Is the plan great news for the country, or is it one more program that could get us back to where we started (families in homes they can’t afford)? Will the refinanced loans keep homeowners current, or will these refinanced loans have a high-default rate like loans modified under the loan modification program?
Timothy Geithner mentioned that the housing finance agencies are charged fees so taxpayers won’t incur much of the financial burden, but in this era of loose government spending, what’s considered – not much. Won’t we be on the hook with the securities that are purchased?
If the government isn’t spending a lot of money on this new plan, it might not be a bad idea. I’m a fan of helping families and creative plans that don’t increase government spending.
Sources:
U.S. unveils new plan to aid home market
U.S. Launches New Housing Effort
Government unveils new mortgage help
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People who can’t afford to own a home shouldn’t be buying a home. Period. No matter how much government help they get. The government is not always going to be there to pay their mortgage or bail them out. There’s nothing wrong with renting a home.
@Att, I partially disagree with you. You are contradicting The Great American Dream of Buying a Home. I agree that if you are not financially sound enough to buy a home then you should refrain yourself. But, imagine if you can save some money and make a down payment and then take a mortgage to pay the remaining installments. Instead of paying rent you can pay that money to your monthly mortgage. I think the new housing plan is a boon to people.
Mack@Las Vegas Foreclosures´s last blog ..Commercial Real Estate Bubble
Isn’t it interesting that the HFA’s are having financing difficulties because most private investors aren’t lending. So, the gov’t has decided that instead of backing off and allowing the market to correct itself, it will add on another gov’t funding program… This should be interesting.
Evans GA Real Estate´s last blog ..All Brick 4 BR 2 BA In Columbia County