Treasury Considers Plan to Stem Home-Prices Decline

[Slimprofits]

WSJ

By DEBORAH SOLOMON and DAMIAN PALETTA

WASHINGTON -- The Treasury Department is considering a plan to revitalize the U.S. home market by reducing mortgage rates for new home loans, according to people familiar with the matter.

The plan, which is in the development stages, would use mortgage giants Fannie Mae and Freddie Mac to bring loan rates down as low as 4.5%, a full percentage point lower than the prevailing rates for 30-year fixed mortgages.

Government officials are under pressure to stem foreclosures, which underpin much of the current financial crisis. Treasury has struggled for months to come up with a plan that would ease the market without appearing to bail out homeowners and lenders.

Under the plan, Treasury would buy securities underpinning loans guaranteed by the two mortgage giants, which are temporarily under the control of the government, as well as those guaranteed by the Federal Housing Administration. Fannie and Freddie guarantee a large proportion of all new home loans made in the U.S.

Desperation sets in.

related: Mr Mortgage says, Don't believe the hype - 5.5% rates do not exist for most

[Master Shake]

Re: Treasury Considers Plan to Stem Home-Prices Decline

I actually was looking at rates today, thinking about doing a re-fi with cash out. 4.5% sounds sweet; currently at 5.5.

[jiimbergin]

Re: Treasury Considers Plan to Stem Home-Prices Decline

I actually was looking at rates today, thinking about doing a re-fi with cash out. 4.5% sounds sweet; currently at 5.5.

I assume 4.5% rates will allow many whose home is not underwater to refinance, but I assume it won't help those whose mortgage is already greater than the market value? It won't affect me since I have no mortgage, but most of my children do.

[charliebrown]

Re: Treasury Considers Plan to Stem Home-Prices Decline

Oooh this makes me angry!

I thought I remember under questioning of Ben Bernake by Ron Paul that big Ben said that the fixing of prices during the depression was a bad thing. I guess that dosen't that go for home prices.

Don't these ding-a-lings get it?? The reason that homes aren't selling is there too expensive! Look at median incomes and median home prices there just not in line. If you think that home prices are going to sky rocket and you get ninja financing than yeah people will stretch. Take the ninja loans and appreciation out of the equation and people are going to buy what they can afford (morgage of roughly 250%- 300% of household income)

Bringing down interest rates makes payments easier but will do nothing about maintenace, energy costs, property taxes, insurance etc.

I bought my house in 1998 for 240K. My salary was 90K, guess what?
now my house is worth about 330K (Peaked at 375 in 2006) and my salary 90K. Wages stagnated and increased home prices. I could no longer afford my house if I had to purchase it now with 10% down.

Fire these idiots. How is it that with record low congressional approval, 90% of them got there seats back??

[goadam1]

Re: Treasury Considers Plan to Stem Home-Prices Decline

Clients of mine are talking about re-financing. They are talking about going house hunting when they heard about the new rates.

[grizam303]

Re: Treasury Considers Plan to Stem Home-Prices Decline

Everything the treasury has been doing lately leads me to believe that somewhere in the treasury, possibly on one of those silly motivational posters, it reads:

PRESERVE PRINCIPAL AT ALL COSTS

The adversity of government to pass anything affecting the principal of these loans leads me to believe that principal is of the utmost importance to the Fed/Treasury.

[tsetsefly]

Re: Treasury Considers Plan to Stem Home-Prices Decline

this is insane.

Why are they so hell bent on desperately on trying to reinflate artificial home prices???
THe worst part is it wont even work...

Is there one sane person left at the treasury or the fed?