* Treasury welcomes ideas to help fix housing market
* "No silver bullet" to housing woes - Treasury official
By Rachelle Younglai
WASHINGTON, June 4 The Obama administration
wants to help more struggling Americans stay in their homes by
reducing the amount they owe on their troubled mortgages, a top
Treasury official said on Saturday.
"We are very definitely trying to facilitate more principal
reductions," said Timothy Massad, Treasury's acting assistant
secretary for financial stability. "It is a very important
piece of the overall solution," he said.
The administration is trying through taxpayer-funded
programs to prevent homeowners from losing their homes. Nearly
$50 billion has been set aside from the $700 billion bank
bailout known as the Troubled Asset Relief Program, or TARP, to
help distressed homeowners.
Persistently high unemployment and a weak housing market
pose a threat to President Barack Obama's re-election prospects
So far, one of the programs has helped some 670,000
distressed homeowners win lower mortgage payments. But that has
done very little to help the overall housing market, which
remains depressed even as other parts of the economy have
started to recover.
A glut of houses for sale, foreclosures, tight credit and
little demand have impeded the housing recovery. Recent data
showed that home prices dropped below the low seen in April
2009 during the financial crisis.
"This has been a very, very tough housing market as a
result of the fact that we went through a horrible financial
crisis," Massad told reporters on the sidelines of a
foreclosure prevention event in Washington.
One of the administration's programs helps distressed
homeowners avoid foreclosure by providing permanent loan
Another program, now ramping up, gives states that have
been the hardest hit by falling home prices funding to help
reduce the principal of a borrower's loan, among other things.
"I think those will make a big difference in terms of the
problems of unemployed homeowners and falling house prices,"
said Massad. But he added the process was tricky.
"There are issues of how you do it, making sure it's fair,
making sure you don't create the wrong incentives," Massad
At the event, dozens of homeowners seeking relief waited to
talk to housing counselors and their mortgage servicers, who
collect housing payments and negotiate new terms for troubled
One housing counselor expressed frustration with the
servicers, saying more people would still be in their homes if
their principal was reduced.
"Servicers are not required to do it," said Shaneece
Hudson, a mortgage adviser with the National Community
Reinvestment Coalition. "Principal reduction is an option (for
the servicers.) But they don't do it. They will do everything
else first," she said.
More than 120 servicers are participating in the
administration's program, including the largest such as Bank of
America (BAC.N), Wells Fargo (WFC.N), JPMorgan Chase & Co
(JPM.N) and GMAC.
"There is no silver bullet. But I think there are a lot of
programs out there that are providing help to people," said
Massad. "If anyone has specific ideas that haven't been tried,
I am happy to hear about them."
(Editing by Peter Cooney)