Both Democrats and Republicans Are Keen to Help Foreclosure Victims

February 16th, 2009 | Tags: Foreclosure Victims

In an unprecedented and rare show of unity, both the democrats and republicans are now keen to help foreclosure victims. The Congress had approved of the $700 bailout money. Now four months later they are competing to help the hapless foreclosure victims.

Billions have been spent on helping to prop up financial houses. But the economy has not recovered – rather the downward spiral continues unabated. This has made the economists of all shades and the lawmakers sit up and focus on the core issue – the housing market.

The Republicans are asking for tax breaks up to a cap of $300 billion in the way of mortgage subsidies so as to attract potential buyers of residential houses. The Democrats are keen to spend a minimum of $50 billion on various federal programmes so as to reduce the number of foreclosures.

The Obama team has its own plan. The administration wants to spend $50 billion to about $100 billion to put a halt on house foreclosures. Later the Democrats are hoping to pass a step that would give more power to the bankruptcy judges enabling them to decrease the mortgage payments for defaulting homeowners. More and more lawmakers from both sides of the divide are agreeing that it is the collapsing house market that is at the root of the economic crisis.

Beneath the apparent unity there are undercurrents. Who will benefit from these various plans? The Democrats want the money to go directly to those who are worst affected by foreclosures. The Republicans want all the homeowners to get a piece of the cake arguing that one big tide will lift up all the boats.

Republican Senator Mitch McConnell from Kentucky said, “Most people recognize that housing itself is at the root of the current economic downturn. We should fix this problem before we fix anything else.”

The Democrats agree but they accuse their opponents for not really doing something but only posturing. In 2008 the Democrats had struggled for many months unsuccessfully. They had tried to pressurize the Bush government into utilizing the $700 bailout money for programmes targeting foreclosure rescue.

Senator Kent Conrad (Democrat) who is the chairperson of the Senate Budget Committee warned that he would not be able to support the stimulus bill unless the lawmakers redirected a sizeable amount ($50 billion) to help foreclosure victims.