Delays in Congress not helping Foreclosures Resolution

The $700 billion in funds promulgated by Congress a few months back in an attempt to assist financial institutions through this economic crisis has been ineffective in fulfilling its initial goals. The funds, intended to restructure or refinance loans of companies and consumers, falls in stagnation at recipient banks. This situation is not helping anybody in the nationwide attempt to stem the flow of foreclosures.

With the number of foreclosed properties peaking at 1.2 million towards the end of the second quarter of 2008, plans to help beleaguered families avoid losing homes to foreclosures appear to be getting nowhere. With some delinquent mortgages broken down and transformed into securities and other products, restructuring would be next to impossible even if the modification is backed-up by servicers and lenders for refinancing.

Congress is criticized to have stagnated in this area and have opted to tackle other issues as their sessions convene. A clamor for an additional $50 billion fund infusion, lobbied by states and cities in danger of defaulting on their budgets, is falling on deaf ears. Foremost in these new calls are Philadelphia, Phoenix, and Atlanta who have been cutting down on their own budgets to address this foreclosures issue on their own. The stimulus package aims to jumpstart an economic recovery program in these states and cities by providing additional jobs and assists troubled homemakers. However, this new influx of cash may be put on hold until the new Congress takes office and President-elect Barack Obama takes his seat in January.

These delays are only fueling the fire for recession as consumers lose more confidence and putting off lenders and financial institutions from participating in the mortgage restructuring program to stop foreclosures. Sheila Bair who leads the Federal Deposit Insurance Corporation has been pushing her plans and seeking help from lenders and servicers to cut down on interest rates down to 3 percent for mortgages in trouble of foreclosures. This modification plan could easily help 1.5 million homeowners.

Related Posts:

• $9.9 Billion for Banks under Government Foreclosures Program
• Obama Adviser Open to the Possibility of More Funds to Help Banks and Reduce Foreclosures
• $50 Million from Ford to Buy Foreclosure Properties
• Persistence: Key to Avoid Foreclosure and Bankruptcy Houses
• Center for Responsible Lending to Congress: “Act Quickly”