Monday, May 12, 2008

Foreclosure debacle has no easy solutions.

May 12, 2008

This is the story today. An easy solution? It doesn’t exist. The mistakes of yesterday can’t be undone easily. I suspect that. whatever they decide, we, the middle class, will end up footing the bill. I am dizzied by this parade of the billions. And I suspect that, one way or another, me, my children, and my grandchildren, will suffer the effects of the mismanagement of those who implemented to their own benefit and allowed the mad “real estate and mortgage bubble”.

Here is the story:

U.S. House Passes Plan to Help Borrowers.

On Thursday May 8th, U.S. House of Representatives voted yes on a $ 300 billion package to help homeowners facing foreclosure. Owners of Florida Condos, Florida Homes, or any Residential Florida Real Estate, could get a substantial relief from this program.

The main provision is that affected lenders would take advantage of an FHA guarantee on such loans. The FHA refinancing will be subject to the lenders writing down 15% of the home’s current appraised value.

This bill does not cover investors and borrowers who lied about their income when they applied to their original loan. First-time home buyers would get $7,500 assistance in the form of a tax credit and US government would provide $15 billion to allow communities to acquire and fix abandoned homes.

39 Republicans supported the FHA proposal and it passed with a 266 to 155 vote. The tax credit to homebuyers drew a broader support (322 to 94).

The bill now goes to the Senate, which must debate and vote on it. However, President Bush signaled that he will veto the bill if it is approved, since it would “force the FHA and tax payers to take on excessive risk, and jeopardize FHA’s solvency”.

The White house has expressed concerns in the sense that mortgage lenders would use the new law to unload their subprime and high risks or non-performing loans to the federal government.

A research report from Pew Center on the States is showing that foreclosures are accelerating and have reached 7,000 to 8,000 per day.

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