Currently, most mortgage loan issuers, like Countrywide, Wachovia, and Wells Fargo, compile their mortgage loans and sell them to investors in the form of mortgage backed securities. This then allows the lenders to generate more funding to finance more loans. The problem with this procedure, is that due to the bad market and investment losses, investors have stopped purchasing the mortgage backed securities, which cuts down on the lenders´ money supply and eliminates the generation of new loans for home buyers.

A new plan is being implemented to try and rectify this situation. Named Project RESTART by its creator, the American Securitization Forum, the plan will hopefully boost the amount of loans available, and also lower their cost. If all works as planned, this would then help to recharge the market. Doing this, would then according to the ASF Deputy Exec. Director, Tom Deutsch, "rebuild confidence in investors in these securities," leading them to buy more loans.

A move like this is desperately needed as many fear the consequences if Fannie Mae and Freddie Mac were to buckle under; 2 of our mortgage giants that are more then feeling the burn of providing the majority of our mortgage funding, especially in the times of our troubled market today. If the market improves, other foundations could step in, relieving some of Mae and Mac´s pressure and strained finances.

Traditionally, lenders never provided much information to the investors about the mortgages they were buying, meaning that the mix of mortgages pooled together could be very high risk. Hopefully if the investors have a more clear idea of what they are getting into, they will buy more; with little to no information they don´t buy at all as the potential risk is too great. Or course, information on each individual borrower, in a pool of loans, will not be realistically possible, but a general summary could be made. Based on these summaries, mortgage pools could then be formed so that the shares or individual loans within, share common features (i.e. loans for prime borrowers with fully documented income/assets, or with down payments of X%, or with credit scores at X levels or more. By seeing that this package was relatively low risk or at a risk level deemed acceptable by the investor, he/she would most likely purchase the pool. Investors could also pick pools based on how much they estimate they would have the potential to gain on their returns.

Industry participants have been invited to make comments on the proposed plan, with a time frame giving until Aug. 22. After that date, the comments would be reviewed and possible revisions would be made. Deustch has a positive outlook on the plan and the way it is being developed, "This is an initiative with significant support from the industry, as it was developed by participants in all areas of the securitization market,...We expect to see widespread adoption".