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Lots of questions about change in mortgage direction
March 9, 2010 - Mike Maneval
With initial efforts not living up to expectations, the Obama administration, the New York Times reports, is changing courses on mounting foreclosure rates. A new policy would subsidize the sale of homes at risk at a loss for the homeowner and mortgage-holder.
The plan sweetens the deal for the financial institutions and homeowners by offering $1,000 to $2,000 to the "servicing bank" and up to $1,500 in "relocation assistance" to the homeowner.
David Streitfeld gives no indication in his report for the Times how the assistance would be funded. He does speak with Thomas Lawler, an economist who says the "short sale" process used under the policy carries greater risks for fraud, though Phoenix real estate agent Chris Paul implies fraud is rooted in the subjectivity of property-value assessments. Others question how many homeowners at risk carry multiple mortgages and warn that the second or third mortgage may prove to be proverbial bridges too far for financiers.
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