Mortgage plan called good step

President Barack Obama's pledge of $75 billion to stem foreclosures and help as many as 9 million homeowners who are struggling to make mortgage payments got the reserved support of local real estate and economic experts.

John Boschen, an economics professor at the College of William and Mary, questioned whether the money would be enough to stabilize the market.

"It's going to be a close call," Boschen said. "The most important thing to do to stop the recession is to stop the fall in house prices and to stop the foreclosures."

Boschen said he applauds any step in that direction.

The plan poses a fairness issue involving people who didn't get in over their heads and buy houses they couldn't afford and those who did, he said.

However, everyone is affected by foreclosures because they negatively affect the value of all houses in a neighborhood.

Bennie Waller, chairman of the accounting, economic, finance and real estate department at Longwood University, said housing needs to be fixed to move the country out of a recession.

But helping people who bought more house than they could afford isn't feasible and it only will delay the inevitable foreclosures, he said.

"I applaud the president for addressing this," Waller said. "For people who lost their jobs and had good intentions of paying their mortgages, this is a good thing. But for people who got more house than they could afford, this is not a good thing."

Laura Lafayette, a senior vice president at the Richmond Association of Realtors, said the plan is a step in the right direction. "We have to stem the tide of foreclosures to stem the tide of home depreciations," she said. "To stabilize prices, we have to get at the foreclosure issue."

The plan gives lenders and servicers incentives to modify loans, which they have not had in the past, said Connie Chamberlin, president and chief executive officer of Housing Opportunities Made Equal of Virginia Inc., a housing advocacy group in Richmond.

"Servicers have been a huge, huge barrier in the past in modifying loans because there has been nothing in it for them."

The success of the plan will depend on whether lenders that receive federal bailout money will be required to modify loans, Chamberlin said.

It also will depend on successful monitoring and oversight, she said. "There were a lot of problems in the past with programs that were great in theory but didn't work."

She also favors the revamping of U.S. bankruptcy rules to let judges reduce mortgages on primary residences to fair-market value. "That has been a big hole in the past."

Contact Carol Hazard at (804) 775-8023 or .