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U.S. Reveals Plan for Addressing Foreclosure Homes Problems

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By : John Cutts    99 or more times read
The huge amount of foreclosure homes has depressed the value of residential properties all over the U.S. and contributed to a banking crisis that some economists stated as one of the worst that the country has ever seen. In an effort to address the housing industry problem, U.S. President Barack Obama's administration recently issued a plan that will overhaul the housing sector.

The main point of the plan designed to address problems of bank and federal foreclosures requires the government to take a smaller role in the housing industry and limit the amount of loans that will be backed by government sponsored entities Freddie Mac and Fannie Mae. The reduction in the role of the government is reportedly meant to pave the way for private capital to enter the fray.

Other solutions that were offered in the plan involve short term options that will give equal share of market responsibility to the government-supported mortgage industry and the private industry. These options were also meant to reduce the mortgage portfolios handled by Freddie and Fannie. According to housing experts, the whole housing industry, even those properties lost to bank owned home lists and foreclosures, is almost entirely supported by the government, and this is what the proposal is said to be trying to change.

Analysts differ in their views with regards to the proposal. According to some, the plan will raise the costs of borrowing for consumers, which will make them even more reluctant to enter the homeownership market. They argued that homebuyers are needed to cut down the number of foreclosure homes in the country and, if costs of borrowing will increase, these homebuyers might end up staying away from the market altogether.

If this happens, analysts assert that lists of repo homes for sale will expand and prices will decline further. Another key point in the proposal identified by analysts was the suggestion to privatize home finance and just limit government backing to Federal Housing Administration programs and other efforts aimed at borrowers who belong to low and middle income households.

With foreclosure homes still at almost record highs in the whole country, government officials stated that the plan might take seven years to a full decade before it can be fully implemented and desired results become evident.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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