The federal government should not offer or sponsor any assistance to persons who are currently, or about to suffer from foreclosure of their home. That sounds so harsh, but the problem is not with the persons who got these terribly written mortgages – it was in the mortgage offices that offered them.
The realty boom was sailing along very well, most everybody connected with home sales and purchase was profiting quite well. Then a group of major and minor lenders got together and decided they could make a killing by offering mortgages to persons who had no right to these kinds of financial instruments.
You must remember that many of the people given sub-prime mortgages, had no income, no jobs, credit was terrible and not thoroughly checked, etc. etc. All the lender wanted was some sort of guarantee that housing values were rising in the area where the mortgage was given. As long as values increased they were safe – or so they thought!
As it turns out, these poor risks turned out to be poor risks. They didn’t make their payments, they left town in the middle of the night, leaving property vacant, employment, credit, and related issues fell to new lows for these poor mortgage recipients.
The sub-prime lenders were caught with their shorts down and literally Billions of dollars turning sour with each passing day. Many were forced out of business in the first few days of the crash. More will follow.
We have no national policy relating to how a person gets a mortgage. The whole process depends upon the judgment of the market place on who is a good or poor risk. As it turns out this was not a good idea because the greedy bankers and lenders burrowed under the market to make a quick buck and it collapsed on them.
To offer aid to the person who didn’t deserve a mortgage in the first place, is placing the aid in the wrong hands.
We should go into the marketplace, find the sub-prime business, trace it back to the crooks who made a quick buck and fine the heck out of them. In this fashion, we might prevent this kind of event from occurring again and again.
The real estate market will recover in a 1-2 yr period. The housing affected will be resold to more qualified buyers and the business cycle goes on. Don’t give aid to these people – they didn’t deserve the mortgage in the first place.