Foreclosure Help From Government
October 27th, 2009
Foreclosure Help From Government
Question: Has the government helped families with "interest only loans" who may lose their home to foreclosure?
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Answer: No, you seem to be confusing families in foreclosure with the banks who took advantage of these people.
The government, through the Federal Reserve, is helping the banks by giving them below-market interest rates loans. Just last week, another $200 billion was made available to banks. They can trade in bad mortgage debt in return for Treasury securities.
That effectively means that the banks have absolutely no reason to work with homeowners in foreclosure. They know they can just hide the foreclosures later on and get free money from the government. So there's no reason to spend any of that free money on helping homeowners save their homes from foreclosure.
There has been a lot of talk about helping the homeowners, but nothing substantial has been done. The HOPE NOW and Project Lifeline programs involve about 6 lenders in the country total, and they are voluntary for the banks to participate in. Also, they do not offer any solutions that banks could not offer in the first place, making them completely public relations schemes.
So, the banks have all the low and no interest rate loans they can handle, which came care of the Federal Reserve. It's also not being discussed that easy credit and low interest rates created the housing bubble in the first place. So the Fed is just doing whatever they can to create another bubble somewhere to bail out this current bubble's crash.
Don't look at what the politicians in Washington are talking about. Look at what they do. They talk about helping families in foreclosure (even proposing funds of $30 billion), while freely giving out hundreds of billions of dollars directly to the banks. Maybe $30 billion for 300 million Americans; over $200 billion and counting for a handful of the largest banks. Who benefits from this?
Hope that helps.
ForeclosureFish
Foreclosure Help : About Government Programs to Stop Foreclosure
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