US housing sector welcomes new rescue effort

12 February 2008 22:23  [Source: ICIS news]

WASHINGTON (ICIS news)--The US housing industry welcomed on Tuesday new action by federal officials to stem the sector’s slide, saying the move will keep more foreclosed homes from flooding the market.


The Treasury Department announced an agreement earlier on Tuesday with major US mortgage lenders that will suspend foreclosure action for 30 days against home owners who are 90-days past due in their loan payments.


Treasury Secretary Henry Paulson said the new private-sector initiative, called Project Lifeline, will give home owners at risk of losing their homes an opportunity to work with mortgage holders to get current on existing loans, refinance debt or reach other arrangements to avoid foreclosure.


The US housing sector is a key downstream consumer of chemicals and chemical-based products, and the decline in new home construction seen since early 2006 has hurt chemical manufacturers.


“This is an important new initiative, targeted to reach not only subprime borrowers but all 90-day delinquent home owners nationwide with a step-by-step approach to find individual solutions,” Paulson said.


Six major US mortgage banks, representing 50% of the country’s home financing market, are taking part in the project.


Mary Trupo, policy issues director at the National Association of Realtors (NAR), said the new Treasury-sponsored initiative “on its face would keep fewer foreclosed homes from coming onto the market”.


Citing other Bush administration and congressional efforts to ease the housing crisis and stimulate the nation’s economy, Trupo said: “We are very pleased that the administration is taking multiple steps to keep people in their homes.”


The National Association of Homebuilders (NAHB) also welcomed the Treasury announcement, saying it appreciates “the continuing efforts of the administration to address the mortgage credit crisis”.


NAR spokesman Walter Molony said the Treasury plan could help sustain an improvement that is already appearing in the US inventory of homes for sale.


There are approximately 3.9m existing single-family homes for sale in the US, or about a 9.6 month supply of homes at current buying rates.  That is down from the peak inventory of 10.7 months’ supply seen in September last year.  In a normal economic environment there would be a 6 months’ supply of homes on the market.

By: Joe Kamalick
+1 713 525 2653

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