Plan for loan modifications boosts subprime securities

03/30/2010 | Bloomberg

The U.S. government's effort to encourage lenders to reduce the mortgage balance of struggling homeowners has pushed up subprime-mortgage securities. The Treasury Department's plan also helps the housing market by curbing foreclosures, said Laurie Goodman, an analyst at Amherst Securities Group. The policy "will dramatically improve the success rate on mortgage modifications," Goodman wrote in a report. "This will, in turn, help cushion future home price depreciation and limit further housing market deterioration."

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