19/2/09- As the US Commerce Department announced a record low number of homes were begun in January, President Obama unveiled a $75 billion plan to tackle the foreclosure crisis. The President’s efforts, entitle the Homeowner Stability Initiative, are hoped to stem the tide of foreclosures for some nine million Americans who could potentially lose their homes in the coming months.
The new plan also highlights the fact that US home builders began the fewest number of new homes in January since the Great Depression. Housing starts dropped 17 percent last month to an annual rate of 466,000. One of the reasons for the low number of new homes is the record foreclosure rates. This has led to a high number of unoccupied homes for sale, often at below-market prices.
In addition to the high foreclosures, new home builders are facing several other obstacles. The US economy is in recession and credit is still very tight for potential buyers. President Obama’s initiative is designed to help up to 5 million borrowers refinance if their mortgages are owned or guaranteed Fannie Mae or Freddie Mac. It also provides incentives to other lenders to help up to 4 million borrowers refinance their mortgages in order to avoid foreclosure.
The housing starts dropped in all four US regions, led by a 43 percent drop in the Northeast. Additionally, building permits dropped 4.8 percent to an annualized pace of 521,000.
