On Wednesday, President Obama announced his new plan to spend up to $275 billion on a plan to help fight the disease of foreclosures, which has been spreading in every market of the US. It is estimated that by 2012, over 8.1 million homes, or 16% of all houses with mortgages, could be in foreclosure. You can see why this has been on Obama’s agenda from the very beginning. A failure to come to the rescue could be catastrophic for the US markets for years to come.
In the speech today, Obama says he plans to put into action his plan which will only help people who were responsible in purchasing a house and who did not take advantage of the system when buying their house. Having Freddie Mac and Fannie Mae currently controlled by the government, he said effective immediately, if your house is secured by Freddie or Fannie, you are eligible to apply for a loan modification. He also said that he encourages all other financial institutions to work with consumers to restructure their loans. He said any institution planning to use government funds will be required to participate in loan modification for qualified consumers.
He also created a $2 billion initiative for neighborhood campaigns to help work together to slow the foreclosure process. This is big news for anyone owning a home as banks continue to receive more incentives from the government to work with customers and their mortgages. Click here to modify your loan today!
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On Wednesday, February 18th, President Obama plans to outline his plan to help subsidize mortgages in his attempts to try and slow the massive foreclosure hitting the US. With the huge increase in housing foreclosures this past year and the expected amount for it to continue to increase, President Obama has been working with banks to try and find a resolve to the decaying real estate problem.
Big news from Washington hit media today as it seems the Obama administration is working to put together a plan to help subsidize mortgages to help reduce the foreclosure count for homes. Their theory is that by helping to insure certain mortgage back debt, they will instill more confidence in banks and help allow them to start lending more. Just as news hit the public, the stock market shot up in its remaining 45 minutes to almost eliminate an earlier 3% deficit in the Dow.
On Tuesday, February 10th, Secretary Geithner is set to unveil the new plan to help buy toxic assets from banks in order to build up the strength of their balance sheet. After a few weeks of consideration of different strategies, it seems like the treasury is going to introduce a program where they will encourage private equity to invest in troubled assets to help get them off bank’s books. To help encourage this, the government is offering protection of additional losses in the assets so that if they did continue to fall in price, the investor would be protected. Also, they are planning on allocating anywhere from $50-$100 billion of the remaining $350 billion in TARP funds to assets in foreclosure.
Recent news has been talking about the possibility of the Obama administration altering or doing away with the current “mark to market” accounting that is required to be used by banks at the current time. Mark to market accounting is the act of updating bank’s balance sheets with the present value of their assets, not compared to when it was first purchased, as what is usually done. Doing away with this, would most likely be a big boost for banks as their balance sheets would hold up in value much greater than they do now.