Industry News

Federal plan: paper, not property?

Questions remain over government ownership of property

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The multibillion-dollar federal plan to buy up financial firms' bad assets in an effort to kick-start the credit markets has more to do with "paper" than property, say experts. And while the details on the form and function of the plan have not been finalized, they also say there is the possibility that the government will end up owning homes as a result of the bailout plan's implementation. Under the plan (see Inman News), the Treasury secretary can buy up to $700 billion in mortgage-backed securities and other assets -- the so-called "paper" instruments clogging banks' books -- to encourage new lending. There are also provisions in the plan that require the Treasury secretary to seek to "maximize assistance for homeowners and ... encourage the servicers of the underlying mortgages" to push homeowners to participate in programs that are intended to minimize foreclosures. And the legislation, signed earlier this month, provides that the Treasury ...