Bloomberg reports that US banking committee senators have asked regulatory bodies (FHFA) now controlling mortgage giants Freddie and Fannie to freeze foreclosures for 90 days in order to “provide immediate relief to many homeowners” and let the companies “turn these non-performing loans into performing assets to minimize losses”. Lawmakers and bank regulators, including Federal Reserve Chairman Ben S. Bernanke, have pressed mortgage companies to help keep borrowers in their homes and out of foreclosure by reducing balances and changing loan terms.
Joshua Rosner, an analyst with independent research firm Graham Fisher & Co. in New York responded by saying “[The government] really has to start thinking about what’s in the best interest of the majority of taxpayers and I’m not sure that freezing foreclosures is in their best interest”
I agree with Mr Rosner. Foreclosure relief and counseling was part of the 2008 housing bill passed a few months ago and it seems to have done little to stem the tide of foreclosures and people walking away from their homes. Folks whose home values have dropped by 50% and/or have lost their jobs, would not really benefit much from a 90 day relief and it would just prolong the agony. It took a number of years for most people signing up for a mortgage they probably did not fully understand to being in a position where they can no longer afford the debt on the place in which they live. So a temporary suspension with little real longer term relief is meaningless. Unfortunately bankruptcy or just walking away may be their best option as house prices and jobs don’t look like recovering anytime soon.
It is also seems more like a political stunt on the part of the senators and other government staff in the lead up to an election to show that they are “doing something”. Sad, a waste of tax payers money and ultimately futile. What’s next, is the government going to propose freezing credit debt or even provide interest free credit cards for those that are having problems paying off their credit card debt? Give me a break. For folks like me, who have been prudent and careful with their finances, it really irks me that we are bailing out people who have not been responsible with their finances.