Cape Coral Florida's Real Estate Guide

Congressional democrats are mad and they are letting the U.S. Treasury know it. The $700 billion dollars granted to Congress in an effort to stem a full-fledged economic meltdown has been used in appropriately, claim some members of Congress. They feel money was freely given to banks and other large financial institutions with no substantial aid given to struggling homeowners. House democrats are demanding that the Treasury commit to the rollout of a massive loan modification plan if they want to have access to any more of the bailout money.

With $350 billion dollars hanging in the balance, the Treasury has taken action and begun to work on a loan modification plan. Some democrats want to make the Treasury implement the loan modification plan proposed by FDIC Chairwoman Shelia Bair. Her proposal is to systematically reduce mortgage payments and soften loan terms for homeowners struggling to keep up with their mortgage payments. Those who oppose this plan say this would cost billions and may not really help reduce foreclosure rates. It is a fact that over half of homeowners that receive modifications to their home loans default on the modified mortgage within six months. Plan supporters feel that by not just lowering interest rates, but actually reducing the balance of the loan, a more successful modification can be made that will have lasting results. That, and the fact that a federal guarantee is built into the plan to protect lenders in the event that homeowners redefault on their mortgages, helps to make this plan more attractive to all parties involved.

It is hard to say whether loan modification would be the best way to solve the housing crisis, especially without it ever being done on a large scale as proposed by Congress. What is true, however, is that any help is welcomed by the homeowners who are hurting and it could be one of many tactics used to help stimulate the housing market and the economy overall.