Bailout Programme Not Specific About Assistance to Foreclosure Victims

The ordinary American who is under the foreclosure cloud has little to crow about the $700 billion bailout plan. Nothing is specific about assistance to foreclosure victims. One thing is clear – it will not stop their foreclosures.

Despite loud protests and a show of opposing the plan ultimately it will see the light of day and get through. The Bush camp feels that without it the economy cannot stabilize. The opponents want some trimming to be done. In the maze of arguments and counter arguments one thing peeps through – the only thing said about foreclosure is ‘maximize assistance for homeowners’. It is too vague and cool for comfort.

Instructions to lenders about writing up monthly reports are not going to help 46-year-old Montes, a nursing assistant. Foreclosure is knocking at the door of her house she had bought in Brockton, Massachusetts about three years ago. Montes has not been sleeping on the danger but negotiating with a housing counselor to see that her loan is modified since February. But so far the result has been negative. In August she got a foreclosure notice. In the meantime the value of her house has been consistently dropping. She bought it for $330,000 and now she will be lucky to sell it for $250,000. Mons is distraught with worrying about the very basics of living – “Where am I going to sleep? Where are my kids going to go?” 20 years ago she had migrated from Haiti to USA. She opines that the government should buy out these loans so that the foreclosure victims get a chance to refinance. Then people will not be evicted and there will be no empty houses. If the big financial houses can be bailed out why not the humble individual?

The federal government’s hands are tied. The mortgages are not the simple ones of yore. These have been made into packets and then sliced and sold as securities to different investors in the country and across the globe. Another reason for the government’s reluctance is that in many cases the borrowers cannot manage even a watered down loan.

Within another year and a half another 40% of all the mortgage holders in America, calculating to 20 million, will be sitting on properties that are worth less than the loans. This is according to the findings of Deutsche Bank. Again California, Nevada, Florida and Arizona will have to bear the brunt of the attack and have an increase in the numbers of reo properties.