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Who’s to blame in foreclosure fiasco?
The building furor over whether the largest U.S. mortgage lenders used so-called robo-signers and incomplete paperwork to force delinquent borrowers from their homes has mushroomed into a probe by the attorneys general in all 50 states.
Those on Wall Street, however, are largely unsympathetic, insisting that possible errors in the foreclosure process are beside the point and that the process begins only when a borrower starts missing mortgage payments.
The potential fallout has raised questions about the depressed U.S. housing market, which was being helped by foreclosure sales. It has also put pressure on stocks as investors worry about the impact on banks’ financial health.
Who is at fault for the foreclosure mess?
- Banks
- Borrowers
Is housing rescue plan enough?
President Barack Obama’s much-anticipated plan to deal with the U.S. housing crisis aims to help as many as 9 million families avoid foreclosure on their homes, one of the root causes of the global financial meltdown.
The Obama plan will involve government subsidies to mortgage servicers and lenders to encourage them to lower payments for borrowers in distress.
The aim is to bring mortgage payments to a more affordable range of around 31 percent of borrowers’ incomes.
At the end of last year, just over 9 percent of all home loans in the United States were in arrears or already in foreclosure, the Mortgage Bankers Association has said.
A total of 8.1 million U.S. homes, or 16 percent of all households with mortgages, could fall into foreclosure by 2012, according to a report by Credit Suisse.
Is Obama’s rescue plan enough to curb the tide of soaring foreclosures? Share your thoughts.
Is there any help for those of us who have been paying our mortgage/equity loans on time along with all other bills, but live paycheck to paycheck and would like help paying off your loans. It just doesn’t seem fair to only help those who over extended themselves and not help everyone out with thier mortgage debt.
Pinching pennies
Times are tough for Americans as their wallets take multiple blows from the housing slump, rising oil and food prices, growing unemployment, inflation fears and recession talk. Many homeowners are facing negative equity, with mortgages bigger than their property’s value.
Even as recently as November, households were going into debt to maintain spending, but new numbers show that Americans are saving at the highest rate since March 1995.
With gasoline prices topping $4 per gallon, fewer Americans will be hitting the road for holidays. Die-hard sports fans are making sacrifices even as they refuse to give up the luxury of going to the game.
What are you sacrificing to make ends meet?
Caption: A vendor sells candy to fans attending the MLB interleague baseball game between the Chicago White Sox and Chicago Cubs in Chicago June 27, 2008. REUTERS/Frank Polich
Lets talk turkey:
Being fat or resembling a porker is no longer an option. It’s an added expense we cannot afford – getting over-weight costs money – right?
A good healthy diet, no gorging and plenty of exercise is a recipe for tackling the money problem – in more ways than one.
It will also stave off the blues…:-)
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Resident Ask... Expert
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Home ownership and the mortgage industry worked very well for homeowners and the economy for many years without direct involvement of Wall Street. This is a vital sector for the economy and individual household balance sheets. We now know that Wall Street’s direct involvement destroyed value which is not likely to be recovered for many years. It is amazing to read that Wall Street is unsympathetic to the plight of homeowners. We would not be discussing who is to blame today if the Government did not save Wall Street from its own excessive risk taking. They would have been out of business and these fine CEOs would be unemployed and banned from ever holding jobs in the financial industry! It is very simple, the Banks ought to be very sympathetic to homeowners because they had the power to influence the industry and it is their collective irresponsible actions and not those of homeowners that resulted in the financial meltdown which in return caused many homeowners: 1)to lose their jobs and ability to find new jobs, 2) inability to sell their homes because the market crashed, 3) inability to refinance because of dramatic home value decline, 4) inability to refinance because of loss of one or two homeowners sources of income. How much influence did individual homeowners have on all the above? Not much. So, the point is not to play the blame game. What is needed are real solutions. In the past industry Titans have demonstrated leadership by coming up with responsible solutions. They have been saved by the Government and it is time they truly pay back by getting together to agree on a single workable solution that will help the homeowners and the industry recover in orderly manner. Foreclosures while an option for the banks it is neither the best nor the most cost effective solution. The simplest and most effective solutions is for All the banks to refinance ALL homeowners at current 30 Year Mortgage interest rate and reduce the principal balance to current home market value. A ONE page loan modification document should be used to accomplish the refinancing process. The question is who pays for the potential loss? Well, foreclosures cost the banks no less than 40-50% of home values including the legal and litigations. Just check the foreclosure sales to confirm the extent of the losses. Refinancing ALL homeowners at once will stabilize the market immediately. The losses are tax deductible so the Banks shareholders are not bearing all the cost of the refinancing and they stand to gain value once the risks are completely boxed. If the industry leaders muster the courage to agree on a common solution they can deal with the problem and if there are legal issues the Government can be called to pass appropriate legislation immediately to provide cover. Is this a simple and naive solution? Perhaps, but where are the smart solutions that truly address the problem? The Banks need to do the right thing to save themselves and the economy. If this problem gets out of control they stand to lose the most and this time the Government has the legal authority to let them fail.