The NYT weighs in with a bailout/reform recap
"Prodded in part by some of the nation’s biggest banks, the Bush administration and Congress are considering costly new proposals for the government to rescue hundreds of thousands of homeowners whose mortgages are higher than the value of their houses.
"Not since the Depression has a larger share of Americans owed more on their homes than they are worth. With the collapse of the housing boom, nearly 8.8 million homeowners, or 10.3 percent of the total, are underwater. That is more than double the percentage just a year ago, according to a new estimate of the damage by Moody's Economy.com.
"Administration officials say they still oppose any taxpayer bailout for either people who borrowed more than they could afford or banks that made foolish loans during the height of the speculative bubble in housing.
"But with the current efforts to arrest the housing collapse so far bearing little fruit, Washington is being forced to explore new ideas, among them the idea of a federal mortgage guarantee for troubled borrowers.
"And policy makers are listening to proposals from industry and community groups to use government funds to purchase and refinance billions of dollars in mortgages now in danger of default."
Meanwhile, the saga continues at troubled lender GMAC. From Bloomberg ...
"GMAC LLC, the lender partially owned by General Motors Corp., agreed to loan as much as $750 million to its residential mortgage unit as it seeks to sell a business that finances vacation resorts.
"Residential Capital LLC borrowed $635 million under the agreement yesterday, the Minneapolis-based company said today in a regulatory filing. GMAC Chief Executive Officer Eric Feldstein has cited the resort operation as one of the company's best performing businesses.
"Pressure on Detroit-based GMAC increased today after Standard & Poor's downgraded its credit ratings and those of the ResCap home-lending unit because of difficulty in funding loans. GMAC, controlled by buyout firm Cerberus Capital Management LP, said Feb. 20 it will shut three-quarters of its North American auto-financing offices this year and cut 930 workers after a $2.3 billion loss last year."
UPDATE: FDIC Chairman Sheila Bair weighed in again on housing and mortgage market conditions, as well as the ins-and-outs of loan modifications and principal reductions. Here's a link to the California speech, if you're interested.