It appears that congress, starting with the House of Representatives today took one step closer to proceeding with a probable fix to deal with the mortgage mess.
The bottom line is that the country nor the government can not afford to let Fannie Mae or Freddie Mac, who hold over 70% of the mortgage loans in the US, go down. So congress is trying to stop and the real potential of an additional million or more foreclosures.
While experts agree that we have to do this to avoid one of the worst financial meltdowns of all times, many rightfully ask why the homeowners, who got in over their heads on their own, deserve government help? How much of this mortgage debacle does the American tax payer have to pay for before they say enough is enough? We will soon find out.
To set the record straight, the fact is that so far, very few mortgages have been rewritten with more favorable terms. However, what is happening is that many homeowners are selling before their foreclosure starts by doing what is called a “short sell.”
That means that the lender agrees to accept less than the loan’s full value of the home from the buyer. Follow the money. The people with money come in and buy the home way under value with the banks approval and then turns around and sells the home for more than they paid.
The feds have made it possible for the bottom feeders to take advantage of a very bad situation and make a profit on it. And, its all perfectly legal. So yes the short sale is one way some desperate homeowners or mortgage holders are being cut a break.
That’s if you consider losing everything fits your definition of a deal. Sounds like the kiss of death to me. I guess its better then losing your home and still owning money for going into bankruptcy. All looks pretty ugly at any angle.
To refresh your memory, not too long ago he Feds bailed out Bear Sterns to the tune of $30 billion in a taxpayer-backed rescue. Before that the Feds had already been propping up the system with cheap money to aide lenders to recover from the poor decisions they made.
In fact some of loans were so highly “leveraged” with borrowed money that investment bankers allowed to transpire with no money down in the deal. Now, it appears that we, the taxpayers, are going to pay for the lender’s bad judgment which none of us had anything to do with in the first place.
We are going to all pay because the greedy lenders thought the gravy train would never end or catch up with them. No wonder the house of cards will crumble down with out massive intervention.
My question is why didn’t somebody see this coming early enough to do a heck of a lot more damage control much earlier in the game? Stay tuned as congress comes up with a bail out scheme with our money. When will the nightmare end?
Kirt Eure
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