Housing Rescue: What You Need to Know

[sbyte]

Housing Rescue: What You Need to Know
Saturday, March 1, 2008 CNN money

There are so many plans being floated to stem the subprime crisis and avert foreclosures, it's hard to keep track. A cheat sheet on the major proposals.


Wall Street's plan: Freddie, Fannie to the rescue--block by Bush
~
Community funds: Fix neighborhoods ----------blocked
~
State-issued bonds: Tax-exempt solution -----has most support.

Government fix: Uncle Sam buys mortgages---------the Dodd Bill, backed by Obama

In brief: The government buys at-risk mortgages from lenders at steep discounts, restructures the loans to reduce payments and resells the loans in secondary markets. Investors in mortgage-backed securities take a loss, but get most of their investment back. Borrowers get refinanced mortgages

The argument: It would rescue many home owners from foreclosure by taking them out of high-interest rate loans and putting them into affordable fixed-rate ones.

The plan would jump-start the market for mortgages by establishing a true market value for the securities backed by these loans. Then investors would start buying the securities again, creating liquidity and making it easier for borrowers to get a mortgage.

Who backs it: The idea has support from both progressives, like the Center for American Progress, and conservatives like the American Enterprise Institute

~~~~~~~~~~~~~~~~~~