Next up: Foreclosure aid

By GottaLaff

Yesterday, one Commenter asked what was next on President Obama's agenda. Here's the answer:

With the stimulus victory in hand, Obama planned to shift to the housing crisis with an announcement Wednesday in Phoenix about reversing that sector's collapse.

Late last summer, Americans began feeling the pinch of the recession and left the housing market in huge numbers. That coincided with a sharp increase defaults on home mortgages, a devastating combination that triggered the financial crisis. Lending froze as banks and investment houses realized they were holding trillions of dollars in bad assets.

Under an emergency $700 billion bailout program passed late last year, the Bush administration used half to forestall a financial collapse. But the flow of credit did not ease and use of the money was criticized because it was poorly administered and overseen.

Obama is now working to leverage the second portion of the bailout money into a program that could result in $2 trillion in government and private sector cash infusions to help banks and investment houses clear away "toxic" holdings and thereby spur lending.

As part of the next steps on the bailout, Obama was expected to offer help homeowners on the brink of foreclosure. Details have not been disclosed, but the nature of the crisis suggested mortgage loans would have to be revalued downward along with interest rates.

"We obviously have a major problem: problems with foreclosure, problems with people living on the edge and problems with home values around the country just plummeting, which is affecting family, family finances everywhere," Axelrod said. "We want to do something that will address all of those things."