Foreclosure solution – affordable and sustainable

From the US Department of the Treasury on March 4, 2009:

“The Home Affordable Modification program will help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments.  Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, the Treasury Department today announced program guidelines that are expected to become standard industry practice in pursuing affordable and sustainable mortgage modifications.  This program will work in tandem with an expanded and improved Hope for Homeowners program.”  (links are mine)

This is a good start.  The important pieces to note are the ideas of affordable and sustainable. The affordable piece of the puzzle is already in place, even if it wasn’t by design.  The sustainable part of the program is going to be the tough one.  Nothing exists in a vacuum and markets are efficient.  As one solution looks like it’s working, it will have to be closely monitored so it doesn’t create bigger issues, like inflation.

Mortgage interest rates look good right now and they don’t seem to be going anywhere anytime soon.  Real estate prices are at an affordable level in most markets around the country.  The unemployment rate is definitely a concern right now because it impacts everything else.

The trickle-down effect of the Obama Administration’s actions will take some time.  It’s good to see that they’re taking action, even if nobody has seen anything like this before now.

For more information on the housing market disaster and what happens next, check out Mangled Mortgage by Jon Sterling.