One on One with James Lockhart, Director of the Federal Housing Finance Agency
Tuesday, November 11, 2008
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SUSIE GHARIB: Joining us now to talk more about the new government program, James Lockhart, director of the Federal Housing Finance Agency. Mr. Lockhart, welcome back to NIGHTLY BUSINESS REPORT.
JAMES LOCKHART, DIRECTOR, FEDERAL HOUSING FINANCE AGENCY: Thank you, Susie.
GHARIB: Well, since you announced the program today, it's come under a lot of criticism. You heard our report as well. What do you say to critics including the head of the FDIC, Sheila Bair, who says that your program doesn't go far enough?
LOCKHART: Well, I think it's more than a start. I think it's really a comprehensive program that will really help very many people that are delinquent in their mortgages stay in their homes. They will get affordable mortgages. It will be funded by the people that provided the mortgages, Fannie and Freddie, the banks that did the lending and I really think that private label security holders, those investors that had their securities sliced and diced, should also join this program. It will save them a lot of money versus foreclosures.
GHARIB: What do you say to skeptics who say that some home owners might be worse off by participating in this program because in the end, they'll be owing more on their home than what it's actually worth. What do you say to that?
LOCKHART: Well, I think that the key thing is people will be able to stay in their homes. They will be able to stay in their communities. Their kids will be able to stay in their schools. And over time, I think you know, we have seen in this country that houses -- prices do appreciate. We will see some -- we will see some stabilization in the next year or so in housing prices and then move up over time. So, I think this gives people to recover, stay in their houses and for them to over time see appreciation coming back to their houses.
GHARIB: One of the issues for many Americans and especially distressed American homeowners is that they see the government bailing out the banks. They see discussions about bailing out possibly auto makers, but then when it comes to homeowners, there is no direct help from the government and they're asking, why not?
LOCKHART: Well, I think that -- you know, the government is very involved in this. Obviously we're a government agency and we're overseeing Freddie and Fannie. I think the key thing is that people will be able to get affordable mortgages from the people that made the mortgages. They will be able to get their interest rate lowered all the way potentially to 3 percent. They could get a mortgage extended to 40 years. They could also see a part of their principle set aside and not have interest payment for a long time. So there will be the opportunity for people to get affordable mortgages and to be able to stay in their houses.
GHARIB: As you heard in our report, there are estimates that something like five million people will lose their homes between now and the year 2010. That's even with loan modifications. What can be done to help those people?
LOCKHART: I think this program is the next -- excellent step because it will have a standard for the industry to work towards. And I'm hopeful that the industry does better, that they even get more aggressive, but this should be the standard and it should be adopted, you know, by every servicer.
GHARIB: Well, there's also the issue that we're between two administrations. Until the Obama administration gets fully running, there is sort of a lag time here. Do you think that this program will carry on or even get more aggressive to help distressed homeowners once the Obama administration takes over in January?
LOCKHART: Well, I certainly believe it will carry over. I think it's critical and I'm sure that the Obama administration would think it's a critical that we need to stabilize this housing market. We need to get these mortgages to be more affordable. And that's what this program is all about. We need to prevent those foreclosures. Those 5 million foreclosures, if that's the number, which seems high to me, but if that's the number that someone is predicting, they can be prevented. Maybe not all of them. I mean, some of them are people that are speculators, that won't be saved by this program, but people that are in their houses, that own their houses and are living there, this program can really help and I would really encourage them to call their servicer if they're having problems and get the help today.
GHARIB: All right. Mr. Lockhart, we really appreciate you coming on the program, especially on a day like today. We know that you are really busy. Thank you so much.
LOCKHART: Thank you. Good night.
GHARIB: My guest tonight, James Lockhart, director of the Federal Housing Finance Agency.
