Foreclosure: Democrats Fishing In Foreclosure Cesspool

It is like performing charity with the neighbour’s money for Democrats. With the foreclosure problem getting murkier by the day the Democrats have a straight cut solution – fell the lenders.

At the root of the problem is forwarding loans to millions who were not eligible for it. In such a situation the lenders alone are being projected as villains straight out of a James Bond movie. This outlook is detrimental both to the lenders as well as the borrower. Now that the real estate market has touched a record low the lenders too lose out on their investments. The value of the property they foreclose on has of late become worthless. But listening to Senator Obama (D) thundering at the predatory lenders one gets only one side of the picture is presented.

Lenders are already suffering for past mistakes. Many have downed shutters after going bankrupt. Mortgage Bankers Association reports that less than 5% of the sub-prime ARM’s are in foreclosure. The majority of borrowers are regular in their payments and living in their own houses without passing around the begging bowl for bailouts.

It is yet doubtful if rising payments are the sole offenders because foreclosures are concentrated mainly in those pockets where the real estate market is plummeting the lowest – California foreclosures, Florida foreclosures, Michigan foreclosures and Ohio foreclosures. More than half of all the foreclosures are reported from these regions. It is obvious that many borrowers realizing that there is no point in honouring a $200,000 debt for a house that is worth $170,000 have simple walked away without a backward glance.

Hillary Clinton and her colleagues want a suspension on foreclosures, a hold on rates for five years or more and enforcement on lenders to bring down the loan amount to be at par with the deflated values of the houses. The major defect in these suggestions is that the lenders alone are being targeted. Bit it is the borrowers who broke the contract. Many gambled in a calculated greedy manner. If the betting had been in their favour then today they would have reaped rewards. A gamble can swing either way and so can consequences. Only those lenders who committed fraud should be sifted from the others and be punished. If the one-sided approach is not rectified then tomorrow the mortgage market as well as the borrowers aspiring for a house will suffer.

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