Marketplace has a new podcast for kids, "Million Bazillion!" EPISODE OUT NOW
Fallout: The Financial Crisis

How the new housing bill might help

Dan Grech Jul 25, 2008
HTML EMBED:
COPY
Fallout: The Financial Crisis

How the new housing bill might help

Dan Grech Jul 25, 2008
HTML EMBED:
COPY

TEXT OF STORY

Bob Moon: More ominous housing numbers this morning. Foreclosure filings doubled last quarter compared to a year ago. One in every 171 households nationwide is now in some stage of foreclosure. In Stockton, California, that number hit one in 25. Will the housing bill moving through Congress help? Here’s Marketplace’s Dan Grech.


Dan Grech: Tomorrow, the Senate is expected to vote on a massive housing bill. A key provision would insure up to $300 billion in refinanced mortgages.

Under the plan, banks would have to voluntarily take at least a 15 percent write-down in the value of adjustable rate loans. In exchange, the new mortgage, a 30-year fixed loan, would be backed by the federal government.

The government estimates half a million loans will be refinanced. John Bancroft edits Inside Mortgage Finance, a trade publication. He estimates the number will be much lower.

John Bancroft: There won’t be a big surge of activity right away, but six months down the road, hopefully you can see more borrowers finding a way out of their financial problems.

Bancroft says the program won’t solve the housing market’s most immediate problem: a glut of homes for sale. Over the next year and a half, Lehman Brothers is expecting excess inventory will drive down prices another 15 percent.

I’m Dan Grech for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.