Foreclosures - Democrats And Republicans United On Addressing Foreclosures

Addressing Foreclosures

April 3rd, 2008

Both Democrats and Republicans realize that the most important issue before them is the foreclosure problem but they differ about the medicine to be administered to tackle the disease.

On Tuesday a Democrat bill was voted that has tried to provide a mixture of relief. The bill aimsto sanction 4 billion to allow for communities to buy and re-enter foreclosed houses to make it homes once again. It also targets to see that borrowers are not suddenly surprised by interest hikes. There is the possibility of a hot debate and sparring. The Republicans might again block the bill as they did on 28th February.

For communities to be really benefited the Democrats will have to work with the Republicans so that $15,000 tax credit is available to those who want to purchase foreclosed houses and start living in these. Once the ball gets rolling the demand for houses will also rise. This was the opinion of Senator Johnny Isackson of Georgia.

The step would also make active a plan of Democrat Senator Christopher Dodd, the chairperson of The Banking Committee. He aims at the Federal Housing Administration supporting refinanced loans running into billions of dollars if the lenders agree to reduce the loan principal in proportion to the fallen value of the houses mortgaged. The banks would be forced to bring down their level of profit but gain by having less credit crunch woes.

The Bush administration argues that $4 billion for purchasing foreclosed house is too tall an order that would be a bailout for lenders and speculators; it would be of little help to the victimized borrowers. The rewriting of the bankruptcy code would enable to borrowers to modify their mortgage agreements. There is provision in the bill for making available funds for the various housing counselors so that house owners can talk over the matter with them.

This move follows closely after the Federal Reserve took a leading role at the last minute sale of Bear Stearns to one of its rivals. The Federal Reserve guaranteed about $30 billion assets that included dubitable sub-prime mortgage deals. Also the central bank gave permission to investor groups to avail of emergency funds that hitherto were awarded only to commercial banks.

The Democrats will take this opportunity to criticize strongly the Republicans for supporting the investment giants rather than the unfortunate borrowers whose only crime was to dream of a house of their own.