ALERT!!! Massive Stimulous Plan??????
This has not received much press yet...
WASHINGTON (AP) -- The Obama administration is expected to expand its mortgage aid program on Thursday, announcing new measures that would help homeowners avoid a blemished credit record even if they don't qualify for other assistance.
The new initiatives are expected to include ways to allow borrowers to avoid foreclosure by selling their properties or giving them back to lenders, according to people briefed on the plan who declined to be identified because it has yet to be announced.
One way would be to encourage a "short sale," in which the home is sold for less than the amount owed on the mortgage but the lender considers the debt paid off. Another option is a deed-in-lieu of foreclosure -- in which the borrower gives the property to the lender to satisfy a delinquent loan and to avoid foreclosure proceedings.
Short sales are often seen as preferable to foreclosure because they don't harm a borrowers' credit record as much as a foreclosure, but real estate agents have complained that the process can drag out for months.
"The problem is it's never clear who in a bank has the authority to approve a short sale," said Howard Glaser, a mortgage industry consultant in Washington and a former HUD official. Federal standards "would speed the process for buyers and sellers by making it more efficient."
If this occurs w/o a ding to the borrowers credit rating.....we could see TRILLIONS of dollars of potential defaulting loans evaporate into thin air....and then those particular consumers would be able to spend again......as their mortgage would no longer be consuming their much of their family income.
There are a number of additional implications to such a policy which we will defer to another blog when more information is known.
We will have to see how this plays out this morning....