Read the Bills Act Coalition

Thursday, December 4, 2008

Isn't This what (in part) started this whole financial mess in the first place

Unless Banks can offer 30 year terms at these rates and only if the banks ca sustain these rates does this plan work. Otherwise people are going to get stuck again once rates return to these artificial low percentages. From the Wall Street Journal: WSJ A1:

“U.S. Eyes Plan to Lift Home Sales: Treasury Considers Encouraging Banks to Offer Mortgages at Rates as Low as 4.5,” by Deborah Solomon and Damian Paletta: “The Treasury Department is considering a plan to revitalize the U.S. home market that would push down interest rates for loans to purchase a home. … The plan … would temporarily use the clout of mortgage giants Fannie Mae and Freddie Mac to encourage banks to lend at rates as low as 4.5 percent, more than a full point lower than prevailing rates for standard 30-year fixed-rate mortgages. … The plan remains in discussion and may not be made final before the Bush administration's term ends in January. President-elect Barack Obama has said repeatedly that his administration would do more than the current one to help struggling homeowners but he has not offered specifics. Treasury views this plan as potentially halting the slide in home prices by enabling borrowers to afford bigger loans, thus increasing demand and pushing up home values. The lower interest rates would be available only to borrowers who are buying a home, not those refinancing a mortgage. Borrowers would have to qualify for a mortgage guaranteed by Fannie, Freddie or the Federal Housing Administration.”

WashPost A1:
“The Treasury Department is strongly considering a plan to intervene directly in the mortgage industry to dramatically force down rates and stimulate the moribund housing market, according to sources familiar with the proposal.”

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