Unemployed homeowners could get financial assistance
WASHINGTON -- The Obama administration is engaged in high-level talks about providing financial assistance to homeowners who've lost their jobs and can't afford their mortgage payments.
The Treasury Department held meetings on the subject as recently as Thursday with key stakeholders, according to Laura Armstrong, a spokeswoman for Hope Now, an alliance of non-profits and mortgage servicers, and more discussions are planned.
Proposals include getting servicers to let jobless homeowners skip some monthly payments, according to Faith Schwartz, executive director of Hope Now.
Another possibility that has been discussed includes grants or loans to temporarily cover part of the mortgage costs for homeowners who become unemployed, says Paul Willen, a Federal Reserve Bank of Boston economist.
"Treasury has now brought us all together," says Jack Shackett, Bank of America's head of credit-loss prevention, who is involved in the discussions.
"Even if it takes Treasury awhile to get some guidance out, the talking itself is great," Shackett says.
Treasury officials declined to comment. No time line for any new government initiative has been set, says Schwartz, who is also involved in the talks.
The meetings have included major lenders, economists and government officials from Treasury, the Department of Labor, Hope Now and the Federal Reserve.
The discussions come after a $75 billion plan announced in March by the administration. That plan seeks to prevent foreclosures and get homeowners into more affordable mortgages but has been criticized for getting off to a slow start.
But now, with unemployment nearing double digits, some economists say efforts to prevent foreclosures must also involve financial help to homeowners who lose jobs. Otherwise, they say the housing recovery could stall.
"We're seeing interest at high levels," Willen says. "At this point, the idea that unemployment is the real problem (in the housing crisis) is the conventional wisdom on Capitol Hill."
Some real estate groups applauded the talks, saying mounting joblessness will haunt any housing recovery.
"I've not been a part of the discussions, but we are aware of them," says Lawrence Yun, chief economist at the National Association of Realtors.
"If we want to prevent foreclosures, something needs to be done, and it's not mortgage modification," says Morris Davis, an assistant professor of real estate and urban land economics at the University of Wisconsin-Madison, and one of the authors of a relief plan that would provide housing vouchers attached to unemployment insurance.