Steve Chiotakis: Millions of bad mortgages have made a mess of the American housing market. But the Wall Street Journal reports there could be a deal in the works — part of a bigger plan between state attorneys general and big banks to help homeowners who are underwater in their loans.
Nick Timiraos is one of the Journal reporters who’s working on the story, he’s with us now. Morning Nick.
Nick Timiraos: Morning, Steve.
Chiotakis: I know these talks have been going on for a while now. What’s the latest plan coming out of those talks?
Timiraos: Well, the latest idea is that you would have some kind of way to refinance homeowners who owe more than their homes are worth. Normally, if you don’t have equity, you can’t refinance. And there’s a lot more interest in trying to see if folks who are underwater can take advantage of these mortgage rates that are very low.
Chiotakis: If both sides, Nick — the regulators and the big banks — all get on board, are we going to see a settlement, do you think, any time soon?
Timiraos: I think tnere is a desire to get a settlement done quite soon. This has been going on for many, many months; probably longer than anybody here had hoped. But in terms of handicapping this, I keep hearing, “Oh, we’re just a few weeks away, we’re a few weeks away,” and so it’s hard to tell. But it seems that we’re getting close to a point banks and the regulators and the state attorneys general are going to have to decide if they want to fish or cut bait at some point on this.
Chiotakis: I know the attorney general here in California was trying to make a deal, and pulled out at the last minute, right?
Timiraos: Right. Attorney General Harris pulled out two weeks ago, and the hope is that this refinance plan will be enough to get California back into the deal. California has more underwater homeowners than any other state, so this could really be a sweetener to get California back into the deal and craft the multi-billion dollar, multi-state settlement that had been the original goal of these talks.
Chiotakis: Can anything really bail us out of this housing mess? I mean, other than just time?
Timiraos: It’s going to take time — there are certain things that can be done aroudn the margins that will help. If you make it easier for homeowners to sell their homes when they’re underwater in what’s known as a short sale, that’ll help.
There are lots of different things that can be done around the margins to keep things from getting worse. But really, you need to lend, and you need to get jobs back so that people can buy homes. And those two things — increasing lending and making people feel more comfortable about their job situation — are going to do more than anything else to get the housing market moving forward.
Chiotakis: Nick Timiraos with the Wall Street Journal. Nick, thank you.
Timiraos: All right, thanks so much.
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