Question
Consumers > Home Ownership > Mortgage Crisis
The Federal government has to do more to help reduce home foreclosures
|
948 votes for this question.
Background
In the wake of the mortgage industry meltdown, Senator Chris Dodd, Chairman of the Banking Committee held hearings in March 2007 and asked executives from the top five subprime mortgage companies to testify and explain their lending practices; Dodd said, ""predatory lending practices"" endangered the home ownership for millions of people. Moreover, Democratic senators such as Senator Charles Schumer of New York are already proposing a federal government bailout of subprime borrowers in order to save homeowners from losing their residences. Opponents of such proposal assert that government bailout of subprime borrowers is not in the best interests of the U.S. economy because it will simply set a bad precedent, create a moral hazard, and worsen the speculation problem in the housing market.
Lou Ranieri of Salomon Brothers, inventor of the mortgage-backed securities market in the 1970s, warned of the future impact of mortgage defaults: ""This is the leading edge of the storm. … If you think this is bad, imagine what it's going to be like in the middle of the crisis."" In his opinion, more than $100 billion of home loans are likely to default when the problems in the subprime industry appear in the prime mortgage markets. Fed Chairman Alan Greenspan praised the rise of the subprime mortgage industry and the tools which it uses to assess credit-worthiness in an April 2005 speech.
Because of these remarks, along with his encouragement for the use of adjustable-rate mortgages, Greenspan has been criticized for his role in the rise of the housing bubble and the subsequent problems in the mortgage industry. Greenspan later admitted about the subprime mortgage mess that, “I really didn't get it until very late in 2005 and 2006.”
Concerns about the impact of the collapsing housing and credit markets on the larger U.S. economy caused President Bush and Fed Chairman Ben Bernanke to announce a limited bailout of the U.S. housing market for homeowners unable to pay their mortgage debts on 31 August 2007. Mr. Bush said that his administration wished to alleviate the subprime mortgage crisis by ""helping people who have good credit but who have not made all of their payments on time because of rising mortgage payments."" However, homeowners with subprime loans have poor credit by definition; therefore, the immediate intent and scope of Bush's announced plan is not entirely clear.
see more on Wikipedia
Lou Ranieri of Salomon Brothers, inventor of the mortgage-backed securities market in the 1970s, warned of the future impact of mortgage defaults: ""This is the leading edge of the storm. … If you think this is bad, imagine what it's going to be like in the middle of the crisis."" In his opinion, more than $100 billion of home loans are likely to default when the problems in the subprime industry appear in the prime mortgage markets. Fed Chairman Alan Greenspan praised the rise of the subprime mortgage industry and the tools which it uses to assess credit-worthiness in an April 2005 speech.
Because of these remarks, along with his encouragement for the use of adjustable-rate mortgages, Greenspan has been criticized for his role in the rise of the housing bubble and the subsequent problems in the mortgage industry. Greenspan later admitted about the subprime mortgage mess that, “I really didn't get it until very late in 2005 and 2006.”
Concerns about the impact of the collapsing housing and credit markets on the larger U.S. economy caused President Bush and Fed Chairman Ben Bernanke to announce a limited bailout of the U.S. housing market for homeowners unable to pay their mortgage debts on 31 August 2007. Mr. Bush said that his administration wished to alleviate the subprime mortgage crisis by ""helping people who have good credit but who have not made all of their payments on time because of rising mortgage payments."" However, homeowners with subprime loans have poor credit by definition; therefore, the immediate intent and scope of Bush's announced plan is not entirely clear.
see more on Wikipedia
No comments on this question yet.
