News Release: Finance and Economics, Law

Feb. 13,  2009

Expert: Treasury Announcement Signals Help for Housing Crisis

Affordable housing expert Frank Alexander of Emory Law School says the good news for mortgage holders is that this week's announcement by U.S. Treasury Secretary Tim Geithner is "the first time that we've actually had the administration make a financial commitment to dealing with mortgage foreclosure issues."

"What Geithner announced is considerably further along towards a recovery plan for housing than what we witnessed last in October, when the bailout was first done," says Alexander. "I think the broad elements make sense, each in a different context."

While all the details aren't in place, Alexander notes that Geithner's announcement initially hit the right notes: to maximize the availability of long-term, new residential mortgages, which would encourage people to refinance, and to continue the push for reform of the nation's bankruptcy laws "to permit courts to reduce a mortgage to the value of the house."

Alexander is less hopeful about the Treasury Secretary's push for loan modifications. "I'm not optimistic that any of those initiatives are really going to work because of the nature of secondary mortgage market," he says.

Overall, says Alexander, "we now await the details of the comprehensive housing program being developed by the administration,” which should be announced in the coming weeks. Parts of the programs likely can be implemented directly by Secretary Geithner under his existing powers; some can and will be done by U.S. Housing and Urban Development Secretary Shaun Donovan. For other parts of the program they will likely need new legislation."

Alexander is director of the Project on Affordable Housing and Community Development, which provides technical assistance to local governments and nonprofit community development organizations.


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