By Cheryl Reams
The U.S. government housing rescue program is on target to spend more than $2-trillion on bail out efforts, according to a review of government allocations. The effort marks the largest amount spent on record to aid real estate markets in a downturn, and is intended to help push the economy in the direction of a recovery.
The Treasury Department and the Fed have purchased $1.4-trillion in mortgage backed securities, and other government agencies are on schedule to spend more than $600-billion, most of which will be spent before the end of 2010. The efforts are being made to heal housing markets damaged by reckless mortgage lending practices and a series of manipulative maneuvers on Wall Street.
The housing bail out efforts demonstrate how large scale the crisis is in terms of the sheer volume of foreclosures, which have the capacity to destroy the economic foundation of the nation, according to real estate analysts. The Obama administration has made a series of efforts to stem ailing markets by injecting money into programs adopted by the administration under the Troubled Assets and Relief Program, and money borrowed to pull the economy out of its downturn.
The government has launched a $23.5 billion effort to provide aid to 10 states most affected by the crisis. State and local housing finance agencies will administer the fund to help borrowers at risk of losing their homes to foreclosure.
Obama administration efforts have also supported the first time home buyers tax credit, which was expanded to include move up buyers. Through the Recovery Act $5-billion is being spent to support affordable housing, which has been supplied to low-income recipients and $2-billion is targeted to aid in stabilizing neighborhoods most heavily devastated by the foreclosure crisis.
Low mortgage rates along with expanded refinancing guidelines for Fannie Mae and Freddie Mac loans have helped more than four million homeowners to refinance their mortgages. The new mortgages are saving an estimated average of $150 a month.
Other measures are expected to be added to the arsenal of White House housing rescue measures over coming months in order to at least slow the flow of foreclosures, which have hit an all-time record. More than 7-million homes have been foreclosed so far in the mortgage crisis. Government rescue funds are expected to easily surpass $2-trillion, more than the U.S. Savings and Loan Crisis in the 1980’s.