Senator Urges Bailout of Bad Credit Mortgage Borrowers
U.S. lawmakers will have to consider providing aid to about 2.2 million bad credit mortgage borrowers who are at risk of defaulting and losing their homes, the Senate Banking Committee Chairman said Tuesday.
“The impact of losing 2.2 million homes, I suspect, will be in a lot of areas of our cities and towns that are already pretty hard hit, so we clearly want to look at that and legislate,” said Chris Dodd (D-Conn.), speaking to reporters in the nation’s capital after meeting with the National League of Cities.
As mortgage problems mount, foreclosures involving homeowners who took out subprime loans from 1998 until 2006 could cost $164 billion, Dodd said, quoting a study by the Center for Responsible Lending.
The federal government needs to take action to provide thousands of at-risk homeowners “forbearance or something like,” Dodd said.
Delinquencies among subprime mortgage borrowers hit a four-year high in the fourth quarter, the Mortgage Bankers Association said Tuesday.
The trade group said 13.33 percent of people with bad credit mortgage loans were now behind on payments in the quarter, marking the highest rate since the third quarter of 2002.
Subprime borrowers are those with poor or limited credit or high debt.
It seems like one home loan lender after another is taking a hit these days. More than two dozen have already gone bankrupt, closed operations or sought buyers since the beginning of last year.
That’s the direct result of looser lending standards, slowing house price gains and less wage growth leaving banks holding myriad bad loans.
Federal aid of a few billion dollars “may be a lot less costly” than $164 billion in lost wealth, Dodd said.
Mortgage defaults during the next two years may rise to $225 billion, with about $170 billion tied to bad credit home loans, according to a report Monday by analysts at Lehman Brothers Holdings Inc.
SOURCE: St. Louis Post-Dispatch
March 17th, 2007 at 3:06 pm
I will be first in line at the polls on election morning to vote out ANY politician who supports this asinine legislation.
This nanny state we live in is getting ridiculous.
Caveat Emptor.
March 18th, 2007 at 11:36 pm
Senator Dodd is an idiot - oh, wait a minute - is this going to be retroactive to when the mortgage industry started? - I did lose money back in 1990 when the market did the same thing - fair’s fair? And, let’s make sure that those who HELOC’d the heck out of their overvalued homes pay back their loans!
March 20th, 2007 at 1:45 pm
Well, this is a great way to reward the irresponsible, and crooks.
To protect the future of this great nation the government should keep out of this mess. I think people should be allowed to learn a lesson instead of government trying to prop the stack of cards. If the government wanted to do some thing positive they should have done some thing 4 years ago.
I think this seems like a pre-election ploy by the likes of senator Dodd. Politicians trying to save their own aspirations instead of doing whats best for the country (in the long run). When will people learn to do what’s best for the nation instead of their own selfish agendas.
April 15th, 2007 at 1:09 pm
Don’t bail them out. They can become renters for a FEW YEARS AND BUY WHEN SANE PEOLE BUY AGAIN-WHEN HOUSE PRICES BECOME SANE.
April 15th, 2007 at 1:12 pm
DO not bail these people out. They can rent for a few years until house prices are at least 2003 home prices.
August 7th, 2007 at 5:37 pm
Can your company refinance a person who’s
behind on payments. with low score–
in a forberance program.
who is self employed. I can have our accountant fax bank statements for [12]
months to support my income.
* Please help me I was serverly ill and
of work for a while, but I am back at work for the last 2.5 months.
THANK YOU !!!
P.S. Please call me 301-575-6462
August 31st, 2007 at 6:46 pm
When people make investments in anything, including real estate, they always have the option of hedging or insuring to prevent loss of investment.
If United States Government’s has stooped to this level of socialism, it may be wise to move to a more capitalistic country, or vote out socialist (Democrats and Republicans). However, based on the government’s bail out of New Orleans, the Tax Payer’s paid billions and the recipients received a few million. If we managed our money like the US government, we would all need a bail out.
October 29th, 2007 at 11:40 pm
If this legislation were to go through, then we all should give up on the supply and demand economic basis of our economy. Even if the bailout were to happen, it will be decades before our hardworking youth were to buy a house (condo) from saving money and working hard. Sooner or later there is going to be an adjustment in income vs home prices regardless of bailouts. Do we prolong the process or get it over with now. Corruption with mortgage lenders got us to this point and it is time to pay the piper. I am 46 re-married with two incomes and it blows my mind that all i can think about is a starter condo in So Cal because of the insane prices.