HUD Will Plunge in with Renewed Zest to Tackle Foreclosure Problems

The new HUD secretary Tim Geithner promised in an interview with CNN that the agency will plunge in with renewed zest to tackle foreclosure problems.

Geithner has said that talks are afoot to see that all the players in the game – lenders, servicers and borrowers have an incentive. The lenders and servicers have to see that foreclosures are too costly and that it is cheaper to sell the houses. In many cases modification is the best route to take. Here there is a chance to recover when the market once more begins to stand and maybe run. He said, “We are working on … a plan to create a set of incentive, assistance, to do that, while at the same time making sure that we have the tools that will ensure that lenders do it, through a range of options.”

The crux of the problem, he stated, is the modification of loans. But it cannot be left to options – it has to be done and in significant numbers. Simultaneously the impact of new foreclosures has to be seen to. There are other measures being thought of like lowering of rates of interest. This has already been done. New jobs to the tune of 3 million to 4 million are being created through stimulus packages. With jobs people will be able to keep their mortgages running.

Shaun was asked what he thought about the Republicans saying that the mortgage rates are not at record low levels. Their suggestion is the introduction of long-term (30 years) fixed term rates hovering around 4% to 4.5%. Donovan said, “It’s something that we’re actively at.” A decision has as yet not been made by the administration.

The potential cost of these plans run into billions and trillions. The main target is to see that it reaches the foreclosure victims and does not get side tracked. Jobs have to be created without causing another economic downturn and increase in deficit.

Donovan is of the opinion that another positive step will be supported plans for expanded tax credit to about $15,000. He said, “That is something that I think, again, is an important way to start to get people off the sidelines. I think the question about that is how targeted it is. Whether it’s really moving the people who wouldn’t have been homebuyers into the market, and I think we have to make sure that it’s targeted in a way that it reaches the homebuyers that really are going to help to turn this market around.”

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