There is a new movement on Capital Hill regarding help for distressed homeowners. What is happening is that Republican efforts to block homeowners with mortgage assistance is coming to an end. The worry over helping people who made poor buying choices went out the back door with the $30 billion push to prevent a Bear Stearns BK. It has also been clear that for months the FHASecure program has not produced the relief for home owners.
The final legislation is not finished yet, but it appears that thee will be ten billion dollars for states to make loans to homeowners. The states will be able to use several billion to convert at risk mortgages into fixed rate loan programs with better than market rates. This can only happen if the lenders are willing to take a loss. The lender loss will be 15 percent of the mortgage balance. This may be a better deal than what the banks would get if they were to go it alone.
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