Industry Players Agree Federal Housing Administration Must Solely Be In Charge Of Foreclosures

Washington, DC (AHN) - The Foreclosure Relief Bill is still under discussion in Congress, but major housing industry players have already agreed not to create an agency to handle the crisis. Instead all foreclosure work would be handled by the Federal Housing Administration.

There were previous efforts to bring back to life the Home Owners Loan Corporation, which purchased thousands of delinquent mortgages during the Depression period and replaced it with federal government-backed loans with amortizations within the reach of cash-strapped American families during that era. The agency closed during the early 1950s.

According to Realty Times, the decision to concentrate all foreclosure activities in the hands of the FHA has the support of the current administration and the presidential wannabes from both the Republican and Democratic parties.

Under the legislation being crafted, a $300 billion special fund would be established to cover possible losses by the FHA, which would extend loans to Americans headed for foreclosures. The FHA would buy mortgages in bulk at reduced prices from bond investors and lenders, in exchange for substantial writedowns of principal balances.

The FHA plan expected to assist by the end of 2008 half a million American families refinance their mortgages. FHA Assistant Secretary for Housing Brian Montgomery said at a hearing on the House Financial Services Committee, quoted in an FHA press statement, "Our plan will help hundred of thousands of desperate families who have no place else to turn for safer, lower cost ways to keep their homes... We want to be able to help families who are in the right house, but the wrong mortgage."