With pages of details yet to be digested, Spokane-area lenders and researchers reacted cautiously Wednesday to the Obama administration’s foreclosure-prevention proposal.
The Treasury Department estimates as many as 9 million homeowners could be helped by the Homeowner Affordability and Stability Plan. But the foreclosure rate remains relatively low in Spokane County.
At Inland Northwest Bank, President Randall Fewel said the new $8,000 tax credit for first-time homebuyers will probably help the Spokane housing market more than foreclosure relief.
Inland has not foreclosed on a single homeowner, he said.
Fewel said pushing the share of household income dedicated to mortgage payments down to 31 percent will not provide enough relief to borrowers with a lot of other debt.
Still, he said, “I think it’s worth a try.”
One of the plan’s best virtues, said Glenn Crellin, is its focus on helping those who through no fault of their own – maybe because of job loss or the plunging housing market – cannot keep up with their payments or negotiate new loan terms.
Crellin heads the Washington Center for Real Estate Research Center at Washington State University.
“These were (mortgages) that started out to be very reasonable things,” he said, with appropriate documentation of salary and down payments.
Speculators and homeowners with subprime mortgages will not get any relief, Crellin said.
He said homeowners who aren’t yet delinquent could get help before they start to ruin their credit.
“I’m real encouraged by that,” Crellin said. “This is stepping up the process before problems occur.”
Donn Costa, executive vice president of Golf Savings Bank, said an earlier proposal looked good on the surface but suffered in the details. He said he was still examining the new plan, in particular its handling of second mortgages.
Golf is a subsidiary of Sterling Financial Corp.
Numerica Credit Union Vice President for Lending Gene Fitzpatrick said there are many programs to assist borrowers, but reversing the downturn in real estate will take time.
“We’re going to give it our best shot to help people out,” he said. “It’s in our best interest to help members.”
Crellin said the administration’s proposal, by reducing foreclosures, will help all homeowners by stopping the erosion of home values.
“It’s in the best interest of the neighbors,” he said.