Thursday, February 19, 2009

Housing Stability in Athens

by Josh Mei
jm145305@ohio.edu

As housing markets in bigger cities are spiraling downwards, Athens may see a smoother road through the crisis due to the economic stance of the city.

Since most revenue brought in is through Ohio University, that stability may help distance Athens a bit from the national spiraling impact.

Even with budget cuts plaguing the city, Tim Trout of Citizen’s Bank said the solidarity of the university would help out a lot.


Tim Trout talks about the University's role

What Residents Think

See what Maureen Burns-Hooker, an Athens homeowner, says about the new plans and hear her thoughts on the stability of Athens amidst the economic crisis.


Maureen Burns-Hooker expresses her opinions

Help for US Homeowners

On Wednesday, President Barack Obama announced his $75 billion foreclosure prevention plan to help homeowners across the country.

Some economists say the plan will help millions of borrowers in financial distress and prevent the housing market from total collapse.

The purpose of the lending plan would to prevent as many as 9 million Americans from losing their homes to foreclosure.

“In the end, all of us are paying a price for this mortgage crisis,” said Obama, “and all of us will pay an even steeper price if we allow this crisis to deepen.”

The plan would allow up to 4 million borrowers facing foreclosure to get reduced payments through joint efforts by lenders and the US Treasury.

An additional 5 million, who may not qualify for conventional refinancing if their home values have dropped, could refinance through housing finance companies Fannie Mae and Freddie Mac.

The Associated Press reports that “Government support pledged to mortgage giants Fannie Mae and Freddie Mac is being doubled as well, to $400 billion, as part of an effort to encourage them to refinance loans that are "under water" — those in which homes' market values have sunk below the amount the owners still owe.”

While the President's lending plan will help the economic crisis as a whole, he also addressed the trouble it is causing individual families.

“The American Dream is being tested by a home mortgage crisis that not only threatens the stability of our economy but also the stability of our families and neighborhoods,” he said. “While this crisis is vast, it begins just one house and one family at a time.”

Lending Plans and Rates

President Obama’s lending plan calls for modified and adjustable rates. For many young adults looking to purchase a home, these contractual conditions may be confusing.

A modified rate will change some terms from an original mortgage plan and allow borrowers to get a fixed rate on a 15 or 30 year term at today’s rates.

An adjustable rate is formula based, and adjusts according to banks and market conditions.

To better understand this, Tim Trout explained exactly what these are.


Tim Trout of Citizen's Bank explains modified and adjustable rates

2 comments:

Oct3 said...

I think there are valid arguments on both side about this government plan. Will it raise the budget deficit? Probably. Will it help? That’s a good question. I think economies go through cycles and this might be one of them. I read a good article on recessions and their history on

http://www.recessioninfocenter.com

Josh Mei said...

Most definitely. There are always two sides to a story, and both are good points. I agree that we go through cycles every X number of years, so I'm interested to see what's going to happen.