Fallout: The Financial Crisis

A new plan to avoid foreclosures

Nancy Marshall-Genzer Oct 30, 2008
HTML EMBED:
COPY
Fallout: The Financial Crisis

A new plan to avoid foreclosures

Nancy Marshall-Genzer Oct 30, 2008
HTML EMBED:
COPY

TEXT OF STORY

Steve Chiotakis: Here at home, new jobless claims didn’t budge last week, remaining at the same elevated level due to the struggling economy. We’re getting word of a new government proposal as well to help struggling homeowners avoid foreclosure. The money would come from that $700 billion financial bailout package. But the proposal is already being scrutinized by economists, as Marketplace’s Nancy Marshall Genzer reports.


Nancy Marshall Genzer: Details of the program are still being worked out. But it is expected to provide government guarantees for about $500 billion worth of mortgages. Three million homeowners might quality for more affordable loans based on their ability to repay.

Nariman Behravesh is chief economist for IHS Global Insight. He says this is a good first step.

Nariman Behravesh: If we don’t throw a lifeline out to the people who are in effect are at the heart of the problem, mainly that they can’t afford to pay their mortgages and therefore are walking away from them, and in so doing, pushing down home prices — if we don’t address that, then this problem goes on for a lot longer.

Under the plan, the government would provide incentives to mortgage lenders to change the terms of loans. The cost would be shared with the government. Uncle Sam could pay up to $50 billion.

In Washington, I’m Nancy Marshall Genzer for Marketplace.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.

Raise a glass to Marketplace!

Just $7/month gets you a limited edition KaiPA pint glass. Plus bragging rights that you support independent journalism.
Donate today to get yours!