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<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Sunday, March 1, 2009 A big boost for the housing market The president's housing rescue plan might help more homeowners here than elsewhere. By Yoshiaki Nohara Herald Writer A new $75 billion housing plan proposed by President Barack Obama is likely to help many Washington homeowners, a real estate expert says. "It stands to benefit our market much better than other markets that have had much more foreclosures," said Glenn Crellin, director of Washington Center for Real Estate Research at Washington State University in Pullman. The plan announced by Obama on Feb. 18 could help up to 9 million homeowners avoid foreclosures. The initiative is designed to include those who are about to default on their mortgage payments and homeowners whose debts slightly exceed their home values. The plan is expected to exclude those who got an excessive loan knowing they can't afford it. The foreclosure rate remains lower in Washington than in other distressed states such as California and Arizona, Crellin said. The Evergreen State seems well positioned to benefit from the government initiative. The initiative provides incentives for servicers and homeowners. Servicers are expected to receive an up-front fee of $1,000 for each loan modification that meets the plan's guidelines; they can also get up to $1,000 each year for three years if a borrower stays current on his or her loan. A borrower can get up to $1,000 each year for five years as long as payments are kept current. A foreclosed home tends to be sold at a depressed price, which can bring down the values of nearby homes. By reducing foreclosures, the government initiative could prevent home values from continuing to plunge, Crellin said. "In general, it's an approach that needs to be followed," he said. But the housing plan has many unanswered questions, he said. "Obviously, devils are in details," Crellin said. It remains unclear how fast homeowners in Washington can get help from the plan, Crellin said. It's limited by how fast Fannie Mae and Freddie Mac, the government-controlled mortgage giants, can renegotiate loans. The plan is designed for homeowners whose loans are owned or guaranteed by Fannie Mae and Freddie Mac. Jason Bloom, president of the Washington Association of Mortgage Professionals, has a lot of reservations about the housing plan. "It's hard to know looking at each part, how successful each component is going to be," said Bloom, chief executive officer of Elliott Bay Mortgages that has offices in Western Washington. The housing plan has three key parts, Bloom said. One is to refinance loans for 4 million to 5 million responsible homeowners. Another is to use $75 billion to reach 3 million to 4 million at-risk homeowners. The other is to pump $200 billion into Fannie Mae and Freddie Mac to improve confidence in the housing market. All those parts sound good, Bloom said. But he wonders how they will be executed. For instance, what specific criteria will be used to decide which homeowners are responsible? he said. The plan is expected to help a homeowner whose debt is less than 105 percent of his or her home value. "Why 105 percent?" Bloom asked. "Why not 110 percent. I'm just trying to understand who came up with the number." The plan doesn't address what would happen to people who took dual loans to avoid mortgage insurances, Bloom added. The housing crisis is the root cause of the recession and needs carefully planned policies from the government, Bloom said. "The fact that they are taking action is great, and it's needed," Bloom said. "The reality is that until we stabilize the housing market, the economy is going to continue to struggle." Yoshiaki Nohara: 425-339-3029, ynohara@heraldnet.com. READER COMMENTS Be the first to comment. You must be a registered user and verify your e-mail address to post comments to blogs or articles on HeraldNet. To register, click here. To read other terms and conditions, click here. Log out

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