On Tuesday, Fannie Mae and Freddie Mac (along with other mortgage companies) announced some of the first details about how they plan to keep defaulting mortgage holders in their homes. Some critics say the plan to rewrite terms of some of these mortgages to limit payment to 38% of homeowner income doesn’t go far enough.
 
And maybe it doesn’t. But, according to Hal Look, incoming president of the Specialty Tools and Fasteners Distributors Association and senior vice president of marketing and business development for ORCO Construction Supply, Livermore, CA, the measures announced are a first step toward recovery of the residential construction markets.
 
Look recently spoke with me about the condition of the construction markets for our Nov. 10 issue of MDM (see Construction Markets Outlook). In the conversation, he suggested extending mortgage terms to 40 years and lowering interest rates to affordable levels -both options under the newly announced plans by Fannie Mae and Freddie Mac.
 
The move also may help to rebuild consumer confidence, another important aspect to economic recovery, according to Joe DeAngelo, CEO of HD Supply, who also spoke with MDM last week. “Just keeping people in their homes will help to build confidence. Psychology plays a massive role in how these things play out.”
 
The mortgage rewrite programs will be in place by Dec. 15.