Economists generally agree that to get the American economy moving again, the country has to solve it’s little housing problem. Today, President Obama will (or has, depending on when you read this) unveil his mortgage recovery plan. This is seperate from the recently passed Stimulus Package, and taps into the original Bailout money. The reported cost is somewhere around $75 billion, but it will help approximately 9 million homeowners who are in danger of losing their home.
Here’s a bit of what’s in the plan: it will target homeowners who owe more than 80 percent on their mortgage, and try to get their monthly payments below 31% of their monthly income. It will offer incentives for servicers to modify their loans and help at-risk homeowners and create a $10 billion fund to protect those servicers from further declines in home values. The last two are perhaps the most important: It will allow bankruptcy judges to modify mortgages, and it will require all banks getting government money to participate in a standardized loan modification program.
What all this means, essentially, is that the government is trying to keep people in their houses. With fewer foreclosures, home prices will in theory, begin to rise again. That’s the idea, anyway. There are a lot of jobs attached to homebuilding–a lot of people to be put to work and the industry has essentially completely stalled.