Financial Stocks Boosted by Mortgage Deal

Democratic lawmakers reached an agreement with Citigroup on a new loss mitigation plan to let bankruptcy judges alter loans in an effort to prevent borrowers from losing their home to foreclosure. Other mortgage lenders are expected to follow suit. The agreement raised hopes that the steep downturn in the housing market that has badly hurt consumer spending and the overall economy could be halted. Housing stocks rose on the news.

The new deal that could prevent more mortgage foreclosures pulled Wall Street out of a deep early slump and helped pull stocks to a mostly higher close. Modification and home refinance programs are supported under Emergency Loan Modification Act. This foreclosure prevention law was created to help distressed homeowners save their home in times of financial and foreclosure crisis.

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