Addressing Foreclosures Key to Bleeding US Economy

The US economy has continued to bleed causing a major crisis to the housing, insurance and automotive industries. But the highest impact to economy right now is in the area of real estate which has been beset with soaring rates of foreclosures in several states. Economists, organizations and individuals have been frustrated with the seemingly lack of action from the government and financial giants to stem the flow of foreclosures.

Several proposals have been presented to the government, but all the clamor seem to fall on deaf ears. No concrete plans of actions have been finalized even after several weeks since the proposals have been laid out. One of most promising from all this proposals was the one presented by Sheila Bair, the Chairman of the FDIC (Federal Deposit Insurance Corporation). Her proposal suggests using the bailout money approved by Congress in a loan modification program that would help millions of homeowners facing foreclosures.

The plan would seal success to a nationwide effort of putting the economy back to optimum, which the government initiated by buying stocks from major banks, bailing out the insurance giant AIG, and taking over major mortgage movers Freddie Mac and Fannie Mae. Major banks have joined in the fray by starting their own programs in modifying loans for easier mortgage payments.

This plan would probably benefit at least 2 million homeowners in danger of foreclosures from banks like J.P. Morgan Chase, Citigroup and Bank America. Recently, Freddie Mac (Federal Home Loan Mortgage Corporation) and Fannie Mae (Federal National Mortgage Association) also announced similar programs.

An increase in the number of foreclosure homes have flooded the market with low-priced homes or properties sold below market values. This oversupply resulted in a significant drop of prices that is killing the market in California and Florida. Reducing this supply would help to stabilize the market and bring prices back up to normal rates.

These new programs are aimed towards just that. The FDIC's plan for modifications of troubled loans can help approximately 3 million homeowners.

Related Posts:

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• Use TARP to Stop Foreclosures, Bair Says
• Citigroup Ties Up with Large Banks to Alleviate Foreclosure Crisis
• FDIC Auction of Repossessed Property for Sale in Florida
• California, Hit by Repo Homes, Needs Loads of Cash by July