Pointing out that many of the government’s current steps to alleviate the current home mortgage crisis benefit mainly investment banks and other, instead of focusing on real help for ordinary Americans caught in the risk of foreclosure, Hillary Clinton offered her own home mortgage relief plan yesterday. The New York Times reports on what Clinton proposes:

…Mrs. Clinton endorsed federal legislation to expand the government’s ability to guarantee restructured mortgages, which she believes would lead more banks and other private entities to buy and resell mortgages.

And she said she would introduce legislation soon to provide mortgage servicers with protection from litigation when they modified mortgages; Mrs. Clinton asserted that some servicers stayed away from mortgage restructuring because they feared being sued by unhappy homeowners.

Hillary Clinton is offering this mortgage relief plan as part of her overall economic plan for the country. She also recommended that such economic heavy-hitters as Alan Greenspan be tapped to sit on an advisory committee.While some applauded the move, Barack Obama took aim at the idea. The New York Times reports that Obama thinks Clinton’s suggested advisers are not diverse enough in scope:

“One key difference, however, is the diversity and representation that Obama called for — not just some of the same people who helped to create these problems or have a direct financial industry stake in the outcome,” said Bill Burton, the Obama spokesman, referring to Mr. Rubin and Mr. Greenspan, who some critics have said was responsible for overseeing the spread of lax lending standards that caused the subprime crisis.

In any case, the main gist of it is that taxpayers will be further on the hook. After all, reasons Clinton, if taxpayers are the hook for the recent JPMorgan bailout of Bear Stearns, and other moves, they might as well pay for something for which some of them receive a direct benefit.

What do you think of Hillary Clinton’s economic mortgage relief plan?

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mortgage market crisis, mortgage relief plan, JPMorgan Bear Stearns

Some mortgage bonds are struggling on the market right now. The solution? The United States Treasury thinks that the Federal Reserve should start buying troubled mortgage bonds. The New York Sun reports on the possible move for the Fed to start buying troubled mortgage bonds:

The only tool left may be for the Fed to help facilitate a Resolution Trust Corp.-type agency that would buy bonds backed by home loans, the manager of the world’s biggest bond fund at Pacific Investment Management Co., Bill Gross, said. While purchasing the some of the $6 trillion mortgage securities outstanding would take problem debt off the balance sheets of banks and alleviate the cause of the credit crunch, it would put taxpayers at risk.

Is the government really considering upping the taxpayer burdens already present in this country? It appears to be the case. While the Fed has said it’s not going to do as yet, one never knows. So far, the Federal Reserve under Ben Bernanke has shown that it will do whatever it takes to keep investors happy. And if it means more for taxpayers to worry about, or if it doesn’t truly benefit the pocketbooks of ordinary Americans, so be it.

Additionally, this is adding fuel to the fire in terms of the debate over how involved the Federal Reserve should be in terms of economic manipulation. The entire idea of instilling confidence in the market, and of economic stimulus, is one of manipulation and efforts to guide the economy. And, even though the Federal Reserve doesn’t print and mint money, it still has the authority — and the ability — in this modern age where information is more likely to be currency than actual currency, to “create money out of thin air.”

But, eventually, someone has to pay for it.

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Federal Reserve mortgage bonds, economic stimulus, manipulate economy

Existing home sales data for February is in, and the word is that existing home sales rose. This is exciting data for the real estate industry, as it indicates that things may be picking up again, and that the real estate and mortgage markets may be on the way to recovery. The New York Times reports on existing home sales in February:

Existing-home sales advanced to a seasonally adjusted 5.03 million annual rate, up from 4.89 million in January, the trade group said. Sales at condominiums and other multi-family developments increased 3.7 percent after declining 8.2 percent in January.

However, one of the main reasons for this increase is probably due to falling home prices. The BBC reports that the median home price in the US has fallen 8.2 percent since last year:

“It’s clearly a positive indication,” said Pierre Ellis, senior economist at Decision Economics in New York.

“It does seem as if we can tentatively call a bottom in existing home sales. There is price weakness, but that was a given.”

But this could mean good things for the mortgage market. Falling home prices may allow more people to buy homes. Couple that with the fact that mortgage interest rates are finally coming down, and this could mark the beginning of a bit of a recovery. Or at least serve as an indicator that the real estate market is stabilizing.

However, many would-be home buyers are running into some problems. Despite some loosening offered by several moves made by the Federal Reserve last week, some home mortgage lenders still have tight credit requirements. Additionally, minimum amounts for down payments are on the rise. If you want to take advantage of the lower home prices and the lower interest rates, you need to make sure your credit score is good, and that you have saved some money up for a down payment.

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lower home prices, mortgage interest rates, existing home sales