Foreclosure Help
Posted on April 22, 2008
Filed Under Foreclosure Homes | 1 Comment
It is a moot question – should the government help those who at the time of making the mortgage lied about their income? It is little wonder then that they cannot now make requisite payments. Should somebody be helped who is perpetually in debt – to whom taking loans and not repaying is a habit?
Bush government’s reply is a strong ‘no’. This is why White House is not agreeing to a Democratic plan to relax eligibility standards for federal mortgage loans in the hope of diffusing the foreclosure crisis. According to this the lenders will waive off part of the loan on the assurance that the government will make up for the loss. Democrats supported by some analysts opine that this will save 1.5 million families. It will keep them in the houses that are their homes and stem the tide of repo homes from further glutting the real estate market. But many are critical of this scheme and think that it will not help. There are about 3 million caught in the foreclosure net. Helping few will not have much of an effect except for causing divisions.
Barney Frank (D- Mass) is the main architect of this plan. He is the chairperson of House Financial Services Committee. He admitted that the scheme is experimental and the outcome cannot be accurately predicted. He however argues that instead of going into detailed figures the attitude should be that the more people that are saved means betterment for the nation and real estate scenario.
Bush and his prominent Republicans are reluctant to help those who have willingly signed irresponsible loans. They should not be bailed out. If once a precedent is set then the happenings will repeat itself creating another set of problems in the coming years.
The Frank Plan however is gathering speed because so far it appears to be the best idea. Usually when a borrower fails to pay mortgage dues the house is sold to cover the loss. But today that is not possible because in most of the cases (8.8 million) the value of the house is less than the loan amount. The selling option is not there. The Federal Reserve Chairperson Ben S. Bernanke has urged banks to write down the loans or their own accord. But nobody is willing to cut down on the principal. This has prompted Frank to suggest that the FHA become more aggressive.
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