There Is A Strong Opinion for Uncle Sam to Takeover Mortgages Ignoring Banks to Halt Foreclosures

The pundits are in a tizzy trying to chalk out solution to the foreclosure crisis but there is a strong opinion among many that Uncle Sam should directly take over the mortgages, ignoring banks so as to halt foreclosures.

It is nothing new – if banks are given blank cheques with the idea that this will lead to stabilization, in all likelihood once more the banks will sit on it and cook up thousand and one excuses about the difficulties of getting the rescue plan moving. Meanwhile the executives will justify their pocketing of hefty rewards by dipping into the rescue kitty. Thus the taxpayers will once more see their money vanish. Greed is something that can never be checked or conquered.

If the government is prepared to pay out the money in any case, the suggestion is that let Uncle Sam directly buy up from the banks the mortgages of those who are facing the greatest danger from foreclosure? It should not pose difficulties as the banks and financial bodies have accurate details of the borrowers, their related addresses and the balance they owe to the bank. This is one of the things banks are very good at. They also know about the jobs of the borrowers and their earnings. IRS has their tax records. If this is done then the banks will be eased out from the stage and the government or the taxpayer will be the direct creditor having the power to disburse the funds properly. The houses that have been kept as security or collateral will become assets to the governments until repayment of the mortgage.

Another suggestion is that in the event of an imminent foreclosure Uncle Sam can boldly step in and kick start negotiations with the lender regarding reduction of principal and the like. It is the lender who is largely responsible for the mortgage mess and can be cajoled by the government to reduce and defer mortgage payment by extending the term. The borrower would be given sufficient time so that with the improvement in the economy once more a situation is created for extricating oneself from the foreclosure mess. At this point Uncle Sam makes an exit.

This is not exactly the ideal way in which capitalism and the free economy works, but considering the way in which the dishonest misused the system, they were asking for these stern measures.