Obama aid package to help with home foreclosures
Christian Science Monitor
By Michael B. Farrell
... Federal officials say the aid package, which will be taken from the $700 billion Troubled Asset Relief Program (TARP), will be distributed to states based on a formula that will also consider unemployment numbers. The money could possibly fund programs to assist out-of-work homeowners or provide mortgage relief to owners with negative equity. The administration is looking to states to come up with creative solutions to the crisis in their bid for part of the funding.
Some experts, however, say that once the $1.5 billion is divided up among the five states it may amount to merely to a Band Aid on the foreclosure problem.
"It's just not a lot of money in the context of what we're talking about here," says Richard Green, director of the University of Southern California Lusk Center for Real Estate. Especially, he says, "in a place like Nevada, where an astonishing number of homeowners are underwater on their mortgages."
Many real estate experts have been saying that in order to forge a path out of the housing crash, lenders need to lower the principal owed by homeowners who hold mortgages for more than their home's worth.
"Some homes are never going to be worth the mortgage balances," says Professor Green...