Political Hail Mary as Democrats Announce Foreclosure Plan

Posted on October 8th, 2007 by saman

The Bush administration is being called out old west style as the Democratic party is demanding them to action against the countless increases in foreclosures in the
United States asking them not-so-politely to appoint a dedicated advisor to the issue.
The housing market has been in a downward spiral for some time now and as sharp as a punch to the face Senate Majority Leader Harry Reid, house Speaker Nancy Pelosi along side many others are turning up the heat on the Bush camp. Bush’s approach to the crisis has been to do nothing. The problem began by loaning monies to unworthy borrowers, meaning loans to persons with abysmal credit history.
The call to the politicians to allow more money be available to help homeowners pay their debt instead of having them to foreclosure is coming in hopes to rid homeowners of the strain and stress of this poor housing market we see ourselves in. The administration will also be asked to raise the funding caps of home loan brokers such as Fannie Mae.
In response to the Democratic demands the White House spokesman, Tony Fratto, scoffed at the idea of a special adviser saying that the concept was redundant as the current housing secretary, Alphonso Jackson, is already apprised of the situation and is working diligently to come up with a plan to ease the problem. This, to the Democrats, means they know of the issue but aren’t actually doing anything about feeling it may go away and, if not, will remain for the next incumbent. Fratto went as far as to blame the Democrat controlled Congress citing that the legislation has not progressed in the reformation of Fannie Mae and Freddie Mac let alone an overall overhaul of the Federal Housing Administration which makes it possible for low-income borrows to obtain mortgages. The current administration nudged the caps a bit, but not nearly enough to placate the Democratic horde. In August of 2007 the Office of Federal Housing Enterprise Oversight, the longed name government entity which oversees Fannie Mae and Freddie Mac, sent in a request for a 10% change in the cap for its mortgage investment holdings. The cap raise they actually received was around 2% making the cap a total of $735 billion. Democrats, ever the headstrong, have backed the organizations in the raising of the max pricing for home loans that Fannie Mae and Freddie Mac can procure so that it can obtain holdings in higher-end markets like the Northeast (Connecticut, Rhode Island, Maine and other areas where cost of living is higher) as well as California. Democrats and Republicans have vastly differing opinions on the two mortgage refinance giants (no big surprise there) with the Democrats seeing them as a force to stabilize the dieing market and increasing foreclosure trends whereas the Republicans take the tail between the legs approach and refuse to expand the mortgage caps citing the risks to the financial stability of the government despite their exorbitant spending on their own personal raises. Between this year and next nearly 2 million low-interest loans will jump to the high-interest rates making the foreclosure outlook bleak. Bush has proposed expanding the requirements of eligibility for loan refinancing for loans that the FHA has guaranteed calling it “FHA Secured”. The relief from this so-called plan would be moderate at best helping maybe 80,000 homeowners. Not much compared to the 2 million that need it by the end of 2008. Bush has also supported tax law changes that are currently pending in Congress which would temporally change the laws to allow homeowners to avoid paying taxes on the forgiven debt that is being revamped by financial institutions. In the end, however, the only sure thing we can look forward to is more Republican back stepping and needling of the numbers.