US President Barack Obama unveils a $275 billion plan which will help both at-risk homeowners and troubled mortgage finance firms.
Obama said the measures would help between seven to nine million middle-class families restructure or refinance their mortgages and avoid foreclosure.
The US Treasury's aid to troubled mortgage finance giants Fannie Mae and Freddie Mac will also be doubled to $200 billion each to help stabilize the real estate sector.
Falling house prices have been at the heart of the financial sector's problems. More than one million people in the US have lost their homes in the housing crisis.
The plan aims to help 4 to 5 million 'responsible homeowners' to refinance their mortgages.
It also includes a $75 billion 'homeowner stability initiative' to help another 3 to 4 million homeowners who cannot afford to pay their mortgages but have seen the price of their properties plunge.
"The effects of this crisis have also reverberated across the financial markets," Obama said, in an advance copy of the speech he will later make in Arizona.
"When the housing market collapsed, so did the availability of credit on which our economy depends.
"As that credit has dried up, it has been harder for families to find affordable loans to purchase a car or pay tuition and harder for businesses to secure the capital they need to expand and create jobs."
Obama said the plan would help up to 9 million homeowners refinance their mortgages.
Obama said the plan had far-reaching effects as it also prevented the decline of home prices and the loss of jobs.
The initiative comes a week after two US banks, JPMorgan Chase and Citigroup, along with Fannie Mae and Freddie Mac agreed last week to suspend home foreclosures.
The Treasury said it was increasing its preferred stock purchase agreements with the two government-controlled companies to $200 billion each from $100 billion.
"The Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market, to help maintain mortgage affordability, and to help keep interest rates low," Treasury Secretary Timothy Geithner said in a statement.
No comments:
Post a Comment