Obama Plan Will Redirect TARP Funds to Homeowners
President Obama announced a new program Friday that redirects $1.5 billion from the $700 billion bank bailout fund to aid states hardest hit by the housing crisis.
The federal aid will go to housing finance agencies in the five states where home values have dropped by 20 percent or more: Arizona, California, Florida, Michigan, and Nevada.
In Clark County, Nevada, where the president unveiled the plan alongside embattled Senate Majority Leader Harry Reid, 12 out of every 1,000 homes are in foreclosure, according to data mapped by the NewsHour’s “Patchwork Nation” project.
“This fund’s going to help out-of-work homeowners avoid preventable foreclosures,” the president said. “It will help homeowners who owe more than their homes are worth find a way to pay their mortgages that works for both the borrowers and the lenders alike,” he said.
Earlier Friday, the Mortgage Bankers Association came out with new data showing the percentage of all mortgage loans in the foreclosure process during the final three months of 2009 ticked up to 4.58 percent. A record 5.09 percent of loans were more than 90 days overdue.
In some of the hardest hit areas, Planet Money reports, many homeowners have simply given up on trying to avoid foreclosure. Because they owe much more than their homes are now worth, they are increasingly pursuing a cheaper alternative: initiating their own foreclosure.
Meantime, fresh signs are emerging that the commercial real estate market is headed for its own foreclosure crisis. As today’s Washington Post reports, “The new round of financial pain, which some had anticipated but hoped to avoid, now seems all but certain.”