Text of Federal Bailout Plan – House Bill

There has been a lot of talk about the general concepts of the federal bailout plan. For those of you that want the details, you can read the actual House Bill by clicking the link below.

Pay special attention to the provisions concerning foreclosure assistance beginning around page 25. For those loans that the government purchases the proposed legislation would give broad powers to the Feds to assist with loan modifications and negotiated sales.

There is no question that short sales will continue, and probably with increasing volume for at least the next couple of years. Perhaps with the Feds leaning on the loan servicing companies to expedite short sales, we could see the short sale process get easier and faster. Of course, there is the flip side that the Feds could unleash a new level of bureaucracy into the short sale process for loans that the Feds purchase.

Another interesting component of the Bill is the coordination with HOPE. One of the current problems with refinances under the HOPE program — where the borrower could refinance a mortgage to a lower mortgage amount — is that the lender would have to agree to the reduction in the payoff. If the Feds owned those loans the Feds could obviously agree to the reduction of its own loan to allow the refinance.

It will be interesting to see what happens with the Bill and how it will impact the real estate investor community. Sounds like a good topic for the Q&A Conference call this week. If you want to join in go to the Q&A Forum page and register for this free call.
Bailout Proposal Text