Analysts say the housing bailout is a good deal for banks.
"The banks should be thrilled with this," says John Vogel, professor of real estate at Dartmouth College's Tuck School of Business. "This is as good a deal as they were going to get."
Banks will lose roughly $25,000 per home owner by selling their mortgages to the Federal Housing Administration, compared to losing about $64,000 per home owner, on average, by allowing homes to foreclose, estimates Ladenburg Thalmann analyst Richard Bove.
In all, banks will save about $16 billion if they let home owners refinance into mortgages issued by the FHA, Bove says.
Citigroup Inc. said it expects to participate in the refinance program, but that "once the final regulations are available from the agencies, we will be better positioned to evaluate the scope of our participation," a Citigroup spokesman said in a statement.
Wachovia Corp. and Washington Mutual Inc. also expressed support for the plan. A Wachovia spokeswoman said the bank "agrees that enactment of this legislation will help to stabilize and strengthen the housing finance system." A WaMu spokeswoman said it believes "this legislation will provide additional tools and expanded options for borrowers and lenders in addressing troubled loans."
Source: The Associated Press, Madlen Read (07/28/08)
This article is from REALTOR® Magazine Online Edition Daily Real Estate News July 29, 2008
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