The country continues to reel from home mortgage problems even as both the Federal Reserve and the Obama administration are busy exploring options and unveiling plans to help solve the country’s economic slowdown, turning out to be the longest since World War II.
Just recently, Obama announced that a decrease in home mortgage loan rates will be part of his plans in spending the remaining $350 billion from the Troubled Asset Relief Program (TARP). This was a response to the country’s increasing foreclosure rates brought about by a soaring unemployment rate, now at its highest in 16 years at 7.2 percent. Even more will probably seek mortgage refinancing as the government-controlled home mortgage service companies Fannie Mae and Freddie Mac have both announced a mortgage hike.
Meanwhile, Federal Reserve Chairman Ben Bernanke and colleagues held a two-day meeting which aimed to give much needed relief by leaving key interest rates at a record low. The Fed is also looking to consider other options to deal with home mortgage market problems, among others.
One of the Fed’s plans is for a program expansion to bolster availability of consumer loans. The program which is due to take effect this February will allocate $200 billion for student, credit, auto, small business loans, and possibly commercial mortgages. The Fed plans to buy consumer debt-backed securities to make the program possible. Hopefully, the move will also lower loan rates.
Another possible program is the buying of mortgage-backed securities under Fannie Mae and Freddie Mac. This would cost the Fed $500 billion, but is hoped to give relief to the housing market. The Fed has also promised to buy almost $100 billion of Freddie Mac and Fannie Mae debt. Since the Fed’s announcement of the program last year, home mortgage rates have fallen.
Just last December, the Fed already slashed rates from 1 percent to between 0 and 0.25 percent, an unprecedented low which experts predict will continue throughout 2009.
As of now though, home mortgage loan problems continue despite government efforts.
Author Resource:-
John Cutts has been educated in the finer points of the foreclosures market over 5 years. Read articles about home mortgage information on FinancingAndMortgage.com - Home Mortgage Options for All of Your Needs.
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