Congressman Pushes Gov't to Help Refinance Home Loans in Danger
A key congressman is planning a push to expand the federal government's role in stabilizing the housing market. Barney Frank (D., Mass.), the chairman of the House Financial Services Committee, has proposed an initiative that aims to refinance as many as one million "distressed" homeowners out of high-cost loans using government assistance.
The proposal, which could cost as much as $15 billion over five years, would likely involve the federal government buying loans and then helping move borrowers into mortgages backed by the Federal Housing Administration. Certain loans, such as investment properties and those on vacation homes, wouldn't qualify.
In order to sell a loan to the government under the plan, the lender would likely be required to discount the loan to a level the borrower could repay.
Mr. Frank is working on another plan to allocate up to $20 billion in grants and loans that would allow states and municipalities to buy foreclosed or abandoned homes "at or below market value." Some of the money could be paid back to the federal government once the homes are resold.
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