Thursday, May 28, 2009
The Whitehouse Attempting to Revive Forclosure Prevention Program
WASHINGTON–The White House is attempting to revive a stalled U.S. government foreclosure-prevention program meant to restore equity to hundreds of thousands of borrowers whose home values have plummeted. The program, known as Hope for Homeowners, has helped just one borrower secure a more affordable loan in eight months. President Barack Obama signed legislation last week simplifying and lowering the cost of the program for lenders and borrowers. Lenders that participate are also eligible for incentive payments from government bailout funds. Hope for Homeowners has attracted unexpected backers. Investors who had refused to consider the program's requirement that some of a borrower's mortgage balance be forgiven if the home is worth less than is owed, are now trumpeting the provision. "Institutional investors that own securities backed by mortgages are extremely keen to write down principal in exchange for the borrower refinancing into a Hope for Homeowners loan," said Tom Deutsch, deputy executive director of the American Securitization Forum. The growing weakness in the housing market – more people are falling into foreclosure as they lose their jobs, and home values continue to tumble – has pushed some investors to accept more losses.