State and Local Housing Agencies Get $35 Billion from Obama Administration
Posted on | September 28, 2009 | No Comments
State and local housing agencies are close to getting $35 billion from the Obama administration to help provide mortgages to low and moderate income families. This move would further illustrate the government’s role in proping up the current housing market. The plan is designed to help government-operated housing finance agencies that have been finding it very difficult to secure funding throughout the downturn.
These agencies, also known as HFAs, are very critical in assisting low to moderate income families. HFA’s usually offer mortgage interest rates that are .5% to 1% lower than commercial lenders. The Obama administration is very concerned that these agencies have stopped making new loans which could worsen the overall housing market. The plan has not been finalized yet as the Treasury Secretary Timothy Geithner still has to approve the plan.
The US Treasury along with Fannie Mae and Freddie Mac is expected to purchase as much as $20 billion of new housing bonds that are issued by state agencies. It will also assist these agencies by providing an additional $15 billion to use a type of short term, cheap financing.
It will be very interesting to see how each political party reacts to this plan as Democrats are sure to advocate the mortgage assistance while Republicans are likely to point out the billions of dollars that the government has already spent to help low to middle class Americans. Much debate will arise from this topic I am sure.
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Author: Mike Garner
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