Mortgage Plan To Avoid Foreclosure Pain

Mortgage Plan to​ Avoid Foreclosure Pain
The U.S Treasury Department is​ going to​ come up with a​ plan that will save all homeowners who are struggling from the​ foreclosure syndrome .​
The Department will work out this plan with the​ collaboration of​ mortgage industry leaders .​
But the​ analysts have something else to​ say .​
They think that this plan cannot help the​ banks to​ survive from the​ pain of​ home loan.
Sources said that the​ plan is​ almost ready and just needs some final brush up .​
If everything goes right then the​ details will be announced on​ Wednesday .​

The Philadelphia KBW Bank Index,​ BKX hiked 3.1 percent on​ Friday .​
This rise proves that the​ Government is​ aware of​ the​ problems of​ the​ mortgage and housing market .​
Chairman of​ Soifer Consulting,​ Mr .​
Ray Soifer also confirmed the​ previous statement .​
in​ this market the​ foreclosures are increasing and the​ home prices are falling.
As far as​ the​ sub prime loans are concerned they are also facing a​ problem .​
In this loan,​ the​ teaser rates initially stay low .​
But it​ goes up after two or​ three years .​
The new plan will help to​ freeze the​ interest rate of​ the​ borrower before the​ rate becomes higher .​
There are some analysts who think that if​ the​ terms of​ loan are renegotiated then it​ will just postpone the​ writing off process for such loans .​
But the​ loans need to​ be written down because they will not able always be able to​ return the​ expected amount.
The Chief strategist of​ Sandler O’Neil & Partners in​ New York Mr .​
Robert Albertson said that,​ if​ a​ bank wanted a​ higher rate in​ a​ longer term,​ then it​ would not get it​ a​ teaser rate.
The analysts said that the​ treasury hoped that bank could prevent the​ writing down of​ excessive mortgage related assets in​ the​ time of​ acceleration of​ the​ economic growth of​ other sectors .​
This will allow the​ banks to​ produce profits in​ a​ higher level.
Financial Services Analyst of​ PNC Wealth Management in​ Philadelphia Mr .​
Mark Batty said that if​ the​ income of​ the​ borrower increases,​ then the​ borrowers can be in​ a​ position where they can fight with the​ up growing interest rates.
The shares of​ Wells Fargo & Co rose almost 7% to​ $32.43 .​
Countrywide Financial Corp shares rose 16.3% to​ $10.82 .​
These two banks are in​ a​ talking term with the​ treasury.
Some investors consider the​ above scenario too much optimistic.
Portfolio Manager of​ Hedge Fund Trident Investment Management Mr .​
Nandu Narayanan said that postponing the​ inevitable situation can only drag the​ pain on​ for a​ longer time .​
Some other people like Mike Holland,​ and Albertson think that this new plan of​ treasury department though promising,​ can have some bad effects as​ well .​
They think that there will be a​ whole lot of​ inappropriate proposals before finally settling down with the​ right one .​

But most of​ the​ analysts think that this proposal can be a​ big help towards dealing with the​ crisis at​ hand .​
Mr .​
Batty thinks that giving the​ proposal a​ chance is​ better than doing nothing.

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