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$75B and counting. (Up Close).

The world eagerly awaited the Administration's latest solutions for mortgage lending reform, as part of the larger economic rescue effort. While some criticized earlier statements for a lack of detail, such was not the case with the comprehensive Affordability and Stability Plan (see our Front Page News column for details) outlined by President Obama last month.

A pivotal part of "the plan" is the $75 billion Homeowner Stability Initiative. It started at $50 billion, but increased by another $25 billion, typical of recent bailouts. Treasury Secretary Geithner pointed out that the additional money was necessary in order to help keep millions of people from losing their homes, including some in your community. Many of them are in trouble because of unanticipated financial obstacles; others because they overreached for loans they couldn't handle. Not everyone will find a place in the life raft. The President warned that space is reserved for those who are most deserving; dishonest lenders and borrowers who knowingly obtained unrealistic mortgages won't find much comfort. "This plan will not save every home," he said adding that "speculators and house flippers" need not apply.

Supporters and critics quickly began dissecting the program. An unfortunate but necessary requirement to get us back on the right track. It's too much money. Why subsidize irresponsible people who are unable to pay their mortgage as other Americans do? Is it enough to make a dent in the problem? This won't help jumbo borrowers. Of course, we must push our reservations aside, as the plan is in force. It's difficult to determine how fast the results will be seen. Secretary Geithner expects that the nationwide relief will be evident as soon as the rules are formally published early this month.

Beyond the need for lenders and originators to make some major adjustments in their short- and long-term operations, there is also a significant educational opportunity. Most LOs know one or more homeowners who are facing foreclosure-past customers, Realtor clients and others. This is your chance to help them clarify their options, whether or not they remain in your future portfolio. Add a note to your Web site, hold a seminar or send an e-mail to advise on how they may be affected.

We should also view the Affordability and Stability Plan in the larger context of the nation's general economic turmoil. Depending on who you talk to and the current "late breaking" news, we're dealing with great despair ("The verge of collapse ...") and/or guarded optimism ("It's going to be another difficult year ... but we're on the slow, winding road to recovery.") As an industry veteran recently suggested, "We don't need to be reminded that it's a tough environment. But we're a resourceful nation and industry. We'll recover."

The Administration believes the new plan will hasten the recovery of mortgage lending and "affordable" housing. While waiting for the first signs of improvement, the rest of us must accept these inevitable changes to our industry and move forward.

Editor, Mortgage Originator,
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Author:Robinson, David
Publication:Mortgage Originator
Date:Mar 1, 2009
Next Article:Administration announces homeowner plan:--includes strong foreclosure measures.

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