In a move that could create a bottom for the housing market by the middle of next year, the government is taking unprecedented steps to keep people in their homes.
"We need to stop this downward spiral," said James Lockhart, director of the Federal Housing Finance Agency.
According to Reuters, "Eligible borrowers could see rates cut, loan life extensions or principal reductions."
Lockhart said mortgage services will receive a $800 payment for each modified loan.
MarketWatch weighted in, "In their most aggressive move yet to stem a tide of home foreclosures, the government and the mortgage industry said Tuesday they’ll try to modify hundreds of thousands of mortgages to make them affordable."
With such substantial mortgage modifications being made available, the enemy of housing prices becomes job losses. If corporations continue to see sales slide particularly in already troubled industries like the car and retail business, layoffs could still go up by two million or three million by the middle of next year, raising unemployment to 1983 levels of more than 10%.
No amount of mortgage aid can help housing if that many people are out of work.
Douglas A. McIntyre