Does it really comfort anyone that Alan Greenspan pronounced himself \u201cshocked,\u201d shocked at the meltdown of the credit markets here and overseas, in testimony before the U.S. House of Representatives Committee on Oversight and Government Reform this morning? The former Federal Reserve chairman (pictured), famed for favoring low interest rates, told the committee, \u201c[T]his crisis \u2026 has turned out to be much broader than anything I could have imagined\u2026. Those of us who have looked to the self-interest of lending institutions to protect shareholders\u2019 equity, myself especially, are in a state of shocked disbelief.\u201d So maybe markets aren\u2019t perfectly self-regulating after all? We should at least have plenty of time to ponder that, since Greenspan predicted that a stabilized U.S. housing market, necessary before the stumbling economy can truly walk again, is \u201cmany months in the future.\u201d In other congressional testimony today, Federal Deposit Insurance Corp. chair Sheila Bair told the Senate Committee on Banking, Housing, and Urban Affairs that the FDIC and the Treasury Department are coordinating their efforts to prevent avoidable foreclosures, according to CNNMoney.com. \u201cLoan guarantees could be used as an incentive for servicers to modify loans,\u201d Bair said. \u201cSpecifically the government could establish standards for loan modifications and provide guarantees for loans meeting those standards.\u201d The plan, she explained, would be to modify mortgages that are currently unaffordable for the homeowners into ones that would be sustainable. Bair noted that after her agency took over mortgage lender IndyMac recently, it instituted a loan modification process for loans that were 60 days or more past due and which IndyMac either owned directly or serviced. This week, she testified, IndyMac has mailed over 15,000 modification proposals to borrowers. The proposals, according to Bair, would on average cut homeowners\u2019 monthly payments by more than $380, and more than 3,500 have been accepted so far. About two-thirds of IndyMac\u2019s 60,000 loans are potentially eligible for the new program, said Bair, who cautioned that modified loans still have to provide \u201cimproved value\u201d for IndyMac or other holders of the loans. And in testimony, also before the same Senate Banking Committee, Federal Reserve Governor Elizabeth Duke recapped a variety of foreclosure-prevention efforts, highlighting the HOPE for Homeowners program, which was authorized by the Housing and Economic Recovery Act of 2008, enacted last July. The act authorizes the Federal Housing Administration to guarantee up to $300 billion in new 30-year, fixed-rate mortgages for subprime borrowers, provided that the lenders agree to write down loan balances to 90 percent of properties\u2019 current appraised values. Duke told the committee, \u201cLenders and servicers are analyzing their borrowers for good candidates for the H4H program, and the FHA and its authorized lenders are poised to process applications.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Does it really comfort anyone that Alan Greenspan pronounced himself \u201cshocked,\u201d shocked at the meltdown of the credit markets here and overseas, in testimony before the U.S. House of Representatives Committee on Oversight and Government Reform this morning? The former Federal Reserve chairman (pictured), famed for favoring low interest rates, told the committee, \u201c[T]his crisis…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37301],"tags":[],"class_list":["post-1003877385","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\n