Take Action on Foreclosures

Posted on February 20th, 2009 by saman

There have been many pages written about foreclosures. There are many critics arguing that measures must be taken in Washington, as nobody has acted yet, especially on the main reason of the foreclosures and loans crisis, as well as on the increasing number of maturity mortgages, which cannot be paid.

There have been many measures taken in order to stop the financial markets collapse, but the main problem has not been addressed yet. These aspects have been spotted by personalities like Andrew Jakabovich, who is an important member of a center for American progress, which is an organization located in Washington. People will not feel better until they find out that it is worth investing in any mortgage.

For some politicians and analysts this treatment can be considered preferential for important businesses, but ordinary clients, who cannot pay their mortgage debts, can lose their homes through foreclosure.

The good news is that the Federal Reserve that is the USA Central Bank has transferred and will transfer more billion dollars to the economic system in order to sustain credit markets. In addition, they have opened, in case of emergency one credit line, suitable for an investment bank. This action has not been taken since the crisis in the 1920s.

Moreover, agencies that make regulations have required the loans finance organizations Freddie Mac and Fannie Mae, as well as the eHome organization, for loan banks, for the assimilation of mortgage investment worth of about 300 billion dollars. Most of the investors hope that companies will be saved by the government, in case of problems, as they own government guarantees. Nevertheless, according to figures, the government must take drastic measures as soon as possible.

The crisis of foreclosures has lead to a huge loss in loan investments worth of 200 billion USD, which is half of the loss expected by economists.

Taxpayers’ money can be used by the authorities. Even though Bush administration did not want to use public funds for the recovery of financial markets, taxpayers had already faced increases of the taxes, which could help the budget of the state with a few billion dollars. The Federal Reserve and the Treasury of the US are the sources for these increases. Their purpose is to offer a helping hand out of the foreclosures crisis.

University professors have been involved with opinions in this problem and one of them has stated that Fed cannot get back the money as Bear Stearns warranty, which must be acquired by JPMorgan Chase & Co. Another university professor said that this game played by economic regulators is dangerous. However, these increases may not be applied.

Fed and USA Treasury officials had to act as far as Bear Stearns is concerned, because they have faced considerable money problems and they could not help their clients to refund loans. Finally, the government will help Fannie Mae and Freddie Mac, which guarantee or hold about half of all the loans in the USA. Federal Reserve and the Treasury can pay huge sums of money from the taxpayers in order to help Fannie Mae and Freddie Mac stay out from bankruptcy.