Banks claim to want to workout many of these foreclosure deals, but feds reneg on bailout plans

Today I attended a seminar sponsored by the Federal Reserve Bank in NYC. It seems more banks are willing to offer workout with borrowers, from Citibank to JP Morgan and Wells Fargo. A lot of banks are now being proactive and are approaching borrowers who are not yet in foreclosure, or even late with a payment, but who they suspect of possibly being on the borderline as far as continuing to make timely payments. It was encouraging to hear that there is so much activity and sensitivity coming from the banks, especially today, given the announcement by Treasury Secretary Paulsen, that the Feds are re-negging the $700 Billion dollar workout.

His argument was that it was not a bailout that the banks need. He feels that there are systemic problems that the bailout is not addressing. It is unclear what this will mean for homeowners. I think it might be good news. It will force banks to be more cooperative with homeowners and try to work out these loans. But I could be wrong. It may make them less inclined to give credit, and less inclined to have an incentive to work things out. Let's see how this plays out.