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Fed Focuses on Foreclosure
The Federal Reserve is in the process of finding new ways to keep people from facing foreclosure. Some of the ways they are creating relief is by
lowering their homeowner's interest rate, or increasing the length of the loan. In some cases, they are actualy reducing the amount owed on the home.
At this time, it is hard to tell who will actually benefit from these programs. Currently, the Fed has been holding mortgage assets on its books, due to
the AIG and Bear Stearns bailout. The Fed's stake in the Bear Stearns portfolio, is worth nearly thirty billion dollars, however, there is no word on
the amount that is in mortgages. The stake in AIG includes a portfolio of debt obligation, also worth nearly thirty billion dollars and a second portfolio of
mortgage-backed securities worth almost twenty billion dollars. The billions in assets will now apply to the relief plan. The hope is that the continuation of foreclosures will be prevented on the holdings of residential mortgage assets, which are controlled by the Fed.
Although the Fed has wiggle room and can make some exceptions, for the most part, a person must be at a minimum of sixty days behind on their payments before they can
qualify. This was outlined in the initial seven hundred billion dollar bailout during the end of the Bush administration.
Fed Chairman Ben Bernanke has continually urged both administrations to make continued efforts to stem the foreclosure crisis, stating that they
are a thorn in our economic side.
In 2008, we saw an increase in foreclosures of more than eighty percent compared to the previous year, numbering more than two million homeowners who faced
proceedings. Lenders repossessed over 850,000 properties, doubling 2007's numbers.
Marin Real Estate Blog
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