The Housing Crisis' Latest Concern...Falling Prices
Friday, March 28, 2008PAUL KANGAS: Underlying the credit crisis are falling home values. Lower home prices can make it impossible for struggling borrowers to refinance to avoid foreclosure. Today, President Bush traveled to Freehold, New Jersey, to meet with housing counselors who are working with troubled borrowers. Stephanie Dhue reports.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: President Bush visited the Novadebt Housing Counseling Center to highlight his administration's efforts to help homeowners avoid foreclosure.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Foreclosures obviously place a terrible burden on a family, as well as they lead to losses for lenders and investors, and this affects our entire economy.
DHUE: The president says the government's role is to help borrowers and lenders work together. Its effort, called Hope Now, has modified more than 1 million loans. But mortgage consultant Howard Glaser says Hope Now has helped far fewer people than that 1 million number suggests.
HOWARD GLASER, MORTGAGE CONSULTANT: When you dig beneath it a little bit, about 75 percent of those loan modifications are simply payment plans for people who are late on their mortgages, which some argue will only delay the inevitable pain and foreclosure for those individuals.
DHUE: Some individuals are angry the government would bail out Bear Stearns (BSC), as witnessed by Wednesday's protest at the investment bank's headquarters.
Concern about the mortgage meltdown is also front and center in the presidential election. Republican John McCain says the markets should work it out. Democrats Hillary Clinton and Barack Obama are calling for the government to do more.
And Democratic consultant Eugene Ludwig expects the pressure to build for that greater government role.
EUGENE LUDWIG, CEO, PROMONTORY FINANCIAL GROUP: We have the potential of social dislocations the likes we haven't seen since the Great Depression. And the only way to make this equitable and actually stop this raging fire is to give people a chance to stay in their homes and give them a little bit of a bailout.
DHUE: Both the administration and Democratic lawmakers are considering plans that would give the Federal Housing Administration a greater role in helping clean up the mortgage mess. The debate is sure to heat up next week when lawmakers return next week when Congress returns from its spring recess. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
