Foreclosures and the Aftermath of the Elections

November 11th, 2008 | Tags: Foreclosures

What is the news on the foreclosure front in the aftermath of the elections? This is the big question hovering on the lips of all concerned. Washington can now turn from the television predictions and put their mind on the foreclosure crisis. How can the foreclosure victims be helped?

Efforts to alleviate the crisis began about a year ago when the government stepped forward with plans like FHA Secure and Hope Now Alliance. The aim was to enable the borrowers to refinance into more affordable loans so that the house is not lost. The lenders were expected to cooperate because they too had become weighed down with a staggering number of foreclosures.

But the plans came up against a fresh problem – unemployment. Without jobs the people could not afford even the modified mortgage payments. The critics are loud in alleging that the thousands spent to bail out Wall Street is not doing much for stopping foreclosure evictions.

Amidst the plethora of suggestions pouring in the best one has come from Sheila Bair who is the chairperson of the FDIC (Federal Deposit Insurance Corporation). She has put her ideas into practice and results are showing. Last summer the corporation took over IndyMac that was collapsing and worked instantly enabling many to modify their loans. No time consuming task of tackling each case was undertaken. Standard formulas began to be applied. A study was made taking into account the income of each borrower to see whether the interest rate could be reduced or the term of the loan extended so that the monthly payment becomes affordable.

The FDIC plan could easily be emulated on a national scale. But the suggestion has got bogged down by bureaucratic tardiness. According to The Wall Street Journal the bigwigs at the Treasury and White House were not ready to ink the plan. Some opine that the Republicans did not want to commit themselves prior to the elections. They did not want to create the impression of ignoring the proposals of McCain by giving the green signal to feds to purchase the troubled mortgages.

Bruce Marks of Neighborhood Assistance Corporation of America was once the most feared man in the corporate boardrooms – as reported by the Boston Globe. He has spent many years taking up the cause of the house owners. He thinks highly of the plan of Sheila Bair. He said, “It’s a huge step forward… Sheila Bair gets it”.