LoanShak

One of the cornerstones of any economic stimulus, many have said, is the mortgage market. In order to help the economy recover, it is necessary to help the mortgage market — and to prevent foreclosures. With this in mind, there are a number of measures being proposed to help stimulate the mortgage market (and the economy).

1. TARP funds for refinancing

The Obama administration is suggesting that, instead of using the last half of TARP funds for banks, $100 billion of it should go to homeowners in the form of refinancing to avoid foreclosures. Here is what BloggingStocks reports about the possible implications of this mortgage refinancing plan:

"Up to 1.5 million, perhaps as many 2 million at-risk homeowners would
avoid a foreclosure," Felson said. "Having 2 million homeowners retain
their homes … that's a mini-stimulus plan in its own right. That
would mean there would be 2 million more homes paying utility bills,
maintaining their properties, paying property taxes, paying insurance.
That's a remarkable economic boost right there."

2. More amendments to the economic stimulus bill in the Senate

So far, the Senate wants to make some changes to the economic stimulus bill. The House already passed a version that offers a tax credit for first time homebuyers, and the Senate is already proposing the addition of 4% mortgage rates. Now the Senate is considering adding in a 90 moratorium on mortgages so that those in danger of foreclosure have more time to get on their feet or negotiate with their mortgage lenders — or even apply for refinancing with TARP funds.

It is clear that our leaders have finally decided that mortgage lenders can't be trusted to fix this problem with the help of "market forces", and are ready to take serious action.