Emergency Economic

Stabilization Act of 2008

Troubled Assets Relief Program

 

With the economy on the brink and elections looming, Congress approved an unprecedented $700 billion government bailout of the battered financial industry on Friday. Approved by a wide margin the measure passed by 92 votes, 263 to 171. Passing the bill was the result of strong lobbying on the part of the White House and other supporters of the bill all week, following the House defeat of a similar measure last Monday – a defeat that shocked the markets and congressional leaders on both sides.

The legislation, which would allow the Treasury Secretary to purchase as much as $700 billion in troubled assets in a bid to kick-start lending, would usher in one of the most far-reaching interventions in the economy since the Great Depression. The law gives the Treasury $250 billion immediately, then requires the President to certify that an additional $100 billion in funds are needed, and finally $350 billion are subject to Congressional approval. The Secretary of the Treasury may use the fund to buy residential and commercial mortgage loans, credit card securitizations, auto loans and other financial assets for which there is no current market. Companies that sell their bad assets to the government must provide warrants so that tax payers will benefit from the future growth of the companies. The bill also supports homeowners at risk of foreclosure by giving the government more say in how  loans for troubled borrowers are modified so people can stay in their homes.

The House debate began on the heels of two market-moving events: a worse-than-expected monthly jobs number; and a surprise merger announcement between Wachovia and Wells Fargo. For the past two weeks, lending between banks and between banks and businesses has gotten considerably more expensive. Small businesses are having trouble getting loans. As of Friday, one key measure showed that banks were hoarding cash rather than loaning it.

Investors have come to the realization that the Bush Administration’s $700 billion rescue plan will take time to have an effect. But the passage of the bailout package, billionaire investor Warren Buffet’s investment last week in General Electric Co. and even a skirmish between Wells Fargo and Citigroup, Inc. over control of Wachovia Corp. are all positive signs for the economy.

What Does This Mean for Buyers? For Sellers?

Now is a VERY attractive time for Buyers!

LOW RATES = LOW PAYMENTS

Sellers are seeing offers & price declines have slowed.

- Great Deals in the Marketplace

- Low Down Payment Programs

- First-time Homebuyer Programs

- Low Interest Rates

- Affordable Monthly Payments

**Call us today to find out how you can make this economic situation work for you!**

Real Estate Broker, California Department of Real Estate #01050210

Ashlie DuCros

Direct: 714-743-9778

Ashlie.Ducros@mailpcr.com

www.ashlieducros.com