How Banks are Worsening the Foreclosure Crisis: [View All]

[debbierlus]

Really, they should just cut interest rates to 5% for everyone. Hundreds of dollars extra in millions of people's pockets every month. They would stem off a lot of foreclosures, and pump the economy at the same time. The banks would still collect interest and make money. Probably much more then if they don't do it - but I guess they would rather borrow our nation into zillions in debt then work out a solution with borrowers.

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The bad mortgages that got the current financial crisis started have produced a terrifying wave of home foreclosures. Unless the foreclosure surge eases, even the most extravagant federal stimulus spending won't spur an economic recovery.

The Obama Administration is expected within the next few weeks to announce an initiative of $50 billion or more to help strapped homeowners. But with 1 million residences having fallen into foreclosure since 2006, and an additional 5.9 million expected over the next four years, the Obama plan -- whatever its details -- can't possibly do the job by itself. Lenders and investors will have to acknowledge huge losses and figure out how to keep recession-wracked borrowers making at least some monthly payments.

So far the industry hasn't shown that kind of foresight. One reason foreclosures are so rampant is that banks and their advocates in Washington have delayed, diluted, and obstructed attempts to address the problem. Industry lobbyists are still at it today, working overtime to whittle down legislation backed by President Obama that would give bankruptcy courts the authority to shrink mortgage debt. Lobbyists say they will fight to restrict the types of loans the bankruptcy proposal covers and new powers granted to judges.

More at http://news.yahoo.com/s/bw/20090213/bs_bw/0908b4120034085635