The DOW Is JUMPIN JUMPIN

By: Alcides Hoy Jr.

NEW YORK (CNNMoney.com) -- Stocks recharged a rally Monday after Treasury's plan to buy up billions in bad bank assets and a better-than-expected existing home sales report raised hopes that the economy is stabilizing.
The Dow Jones industrial average (INDU) gained 390 points, or 5.3%, with 40 minutes left in the session. The S&P 500 (SPX) index rose 42 points, or 5.6%. The Nasdaq composite added 74 points, or 5.1%.
"I think the stock reaction is a vote of confidence in the plan," said Jack Ablin, chief investment officer at Harris Private Bank.
He said the stock market is also reacting well because the plan is skewed in favor of the private investor, who only has to be responsible for around 7% of the total in any transaction.
But other analysts were less sanguine. "The plan is a rehash of what we've seen before and it still doesn't resolve the issue of how to value the bad assets," said Stephen Leeb, president at Leeb Capital Management. Click to Read More

Mortgage Plan Targets Up to Four Million Homeowners

By Andrew Cho


It seems as though the mortgage crisis has been talked about for months on end, but little has been done to try and fix the situation. That is until now. On March 3, 2009, the Obama administration detailed its plan to help homeowners at risk of losing their houses. A program that officials say could help three million to four million families avoid foreclosure. A program that is expected to cost $75 billion over the next several years.

As part of the plan, both Fannie Mae and Freddie Mac (government controlled mortgage-finance companies) must refinance homeowners at today's low market rates. The participation of the aforementioned companies is expected to help as many as five million homeowners.

The program is designed so that a mortgage lender would first receive cash incentives to modify a borrower's loan so that the monthly payment declines to no more than 38 percent of the household's gross monthly income. Followed by the government matching the lender's cost in reducing payments to as low as 31 percent of monthly income. This could allow for some borrowers to reduce their interest rates to as low as 2 percent.

Rather than injecting billions upon billions of dollars into financial and auto institutions, I believe this is the clear cut path to recovery. It is trying to fix the problem at its core.

References:
http://www.nytimes.com/2009/03/05/business/economy/05loan.html?hp
http://online.wsj.com/article/SB123566276620183361.html
http://www.npr.org/templates/story/story.php?storyId=100831129

Obama Administration weighs plan to lower mortgage rates

Posted by Yen Ho

Written by Alan Zibel

WASHINGTON — President Barack Obama's administration is considering spending taxpayer dollars to cut monthly payments for homeowners on the verge of foreclosure, according to two people briefed on the proposals.

The deliberations came as lawmakers prepared to enact a new tax credit of up to $8,000 for first-time homebuyers that is intended to boost the ailing housing market.

Details of the plans to aid troubled borrowers were not final but were expected to be unveiled in the coming weeks, according to the people who declined to be identified because the details were not yet complete. The effort would be part of a plan to spend $50 billion on foreclosure prevention and establish national standards for modifying home loans.

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