Foreclosure Rescue Plan "Falls Short"

Government Sponsored Homeowner Relief Doesn't Go Far Enough, FDIC Chairman Says

(CBS/AP)  A new joint government-industry effort to help struggling homeowners is insufficient to bring widespread changes in home loans to stem the tide of foreclosures, the head of the FDIC said Tuesday.

Federal Deposit Insurance Corp. Chairman Sheila Bair said the new plan, the most sweeping effort yet, "is a step in the right direction but falls short of what is needed."

Bair, a Bush appointee and independent regulator, has been saying for months that the government needs to do more to help tens of thousands of home borrowers avert foreclosure, including setting standards for modifying mortgages into more affordable loans, and providing loan guarantees to banks that meet them.

Her outspoken public criticism of the Bush administration's mortgage aid programs has won her kudos from Democrats in Congress.

Bair's term as FDIC chairman runs through mid-2011; she previously said she would remain in her position if requested by the new president.

The new plan announced Tuesday is meant to help troubled homeowners by speeding the process for renegotiating hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac.

CBS Evening News correspondent Bill Whitaker reports that it was the FDIC that got the ball rolling by offering to modify crushing housing loans when it took over Pasadena-based IndyMac in July. JPMorgan Chase, Bank of America and HSBC followed suit - all lowering interest rates for hundreds of thousands of borrowers.

The plan could have tremendous importance because Fannie and Freddie own or guarantee nearly 31 million U.S. mortgages, or nearly six of every 10 outstanding. Still, government officials did not have an estimate of how many people would qualify for the new program.

The new approach goes into effect Dec. 15.

To qualify, borrowers would have to be at least three months behind on their home loans, and would need to owe 90 percent or more than the home is currently worth. Investors who do not occupy their homes would be excluded, as would borrowers who have filed for bankruptcy.

Qualified borrowers would get help in several ways: The interest rate would be reduced so they wouldn't pay more than 38 percent of their income on housing expenses. Another option is for loans to be extended to 40 years from 30, and for some of the principal amount to be deferred interest-free.

"Given continually rising foreclosures and their impact on the economy, we must address the need for appropriate economic incentives to prevent unnecessary foreclosures," Bair said in a statement. "As we lend and invest hundreds of billions of dollars to help institutions suffering leveraged losses from defaulting mortgages, we must also devote some of that money to fixing the front-end problem: too many unaffordable home loans."

[txgrouch2007]

I figured something out.

Democrats pander to the poor. Republicans pander to the rich. NOBODY CARES about the middle.

So it has become two-class warfare: The rich and the poor on one side, and the middle on the other side. The Democrats and Republicans support one side. The other side is ON ITS OWN.

You can propose any economic ideology you want - the rich will still be the rich, and the poor will still be the poor. But the middle class can vanish, and it won''t bother the rich or the poor.

[tincup356]

wait till they devalue the dollar so far it collapses, then they will introduce the Amero, and the exchange rate will be pennies on the dollar , thus completing the biggest wealth ripoff in history , and eliminating the middle class .then there will be the haves,and the have nots,nothing in between.

[tincup356]

People need to wake up, it doesn''t matter what party they belong to , they have betrayed us for greed.Funny how execs. can still get their millions in pay and bonuses out of the bailout but they thumb their noses at the little man who has lost nearly everything and is getting kicked out of his home,More Bush lies...

[youngthinker]

well lets be fair if the repubs cater to rich if i may say then they need them so stay in power correct? So if they need them to stay in power they need them to always be rich the more rich the better correct?
then demos are for the poor so using same philosphy they need the poor to stay in power so need the poor to stay poor. So the more poor the better

[txgrouch2007]

"Under the new plan announced Tuesday, the most sweeping effort yet, the interest rate on existing mortgages would be reduced so that borrowers wouldn''t pay more than 38 percent of their income on housing expenses. "
---------------------

That''s cool. I plan to be UNEMPLOYED soon. Does that mean I can stop paying my mortgage?

I''ve got enough savings to pay for groceries and the electric bill for years.

I like this plan.

[txgrouch2007]

People need to wake up, it doesn''''t matter what party they belong to , they have betrayed us for greed.
Posted by tincup356 at 08:07 PM : Nov 11, 2008

You should have figured that out BEFORE Election Day.

[txgrouch2007]

So the more poor the better
Posted by youngthinker at 08:11 PM : Nov 11, 2008

So, what you''re saying is, the Dems and the Reps should get together and rob from the poor and give to the rich. And rob from the middle to make MORE poor.

Oh, wait. That''s what they ARE doing...

[bozworth4]

Latest headline, congress has decides trickle down is not working, interest cut on home loans was just a ploy. Financial institutions tripled interest on credit card accounts. (not deductable on taxes to an all time hight of 67%. Also decided to bail out any and all people which have never been employed with a new $60,000 per person per household non-working bonus. This only applies to those which have never worked and lived off the system. In a related story, people layed off from their jobs have been asked to report for immediate deployment to a foreign country to fight for not freedom, not democracy but for your life and the lives of bankers, oil companies, lawyers and politicians. This is for immediate release.

[wardoglrs]

Just open up the constitution and you will find the answer. We live under a brutal monetary system of deliberate Debt by a Fractured Banking system and as long as you all want to turn and not look at the truth the longer it will take, They dont care about you cause they know that there is no more oil and its all for them selves. This whole dam thing is planned

They have been pulling your hard working money from you illegally for so long that you feel guilty for not following there law This is by what we mean "Dumb Downed American" is.

Show me law. Our Founders fought against this and won. So we must do the same and return law & Order and bring fraud laws up to snuff against those that have betrayed there oath of office

[justanother2]

It seems the government bailout has created a dependency on tax money for the wealthiest of the wealthy. It''s more costly than welfare. Now everybody is getting and crying for a bailout. The big three automakers say they need their share. But I have a plan.
As soon as Ford, GM, and Chrysler get their money, it is time for a class action lawsuit. Remember all those 3 percent over invoice sales? Well, the billions of dollars the government hands to them will change the cost value of all those vehicles they have built in the last say 10 years. At the very least we should be able to get them on price gouging. So we can spread the rebates out to everybody who bought vehicles in the last ten years per vehicle bought.

We can put this money right back in the taxpayer''s hands. Thank you Uncle Sam.

[tincup356]

tx grouch I''ve always known that fact I would not waste my vote on either party and didn''t.

[tincup356]

if they try to send the middle class to the poor house , you will undoubtedly see widespread uprisings and the government would use F E M A laws to implement Martial Law and then All rights and the constitution would be in a frozen limbo.Seems like new laws passed by these same old time politicians from both sides of the isle were setting us up when the anti-terror bills were passed.

[wheear]

What a mess being left the next guy as Bush resigns into the sunset. Perhaps his parachute money should be cut as well!

[edward1975-2009]

First the government became a partner to the banking industry, they now have access to your money. Now the auto industry, airlines, they now will control transportation. All we need now is for them to take over food distribution and healthcare, and we become the Russia of the 21st century. Get used to saying comrade. And to top it off, idiots elected a socialist president or will that be Czar.

[mljohns00]

This program does nothing for most homeowners in trouble. Especially those who were responsible in their obligations, but have fallen on hard times.

The only assistance is if you have nearly no equity in your home. Those who have been paying their mortgage responsibly up to now and have lots of equity will still be foreclosed because the bank makes money on these foreclosures.

[alphaa10000]

txgrouch2007-- The $770 billion bank bailout plan was offered to congress by Bush, after consultation with Paulson, Bernanke and the bankers-- but not us.

Yet, that federal blank check is charged to American taxpayers, and continues the very mindset which brought us the Wall Street disaster, in the first place.

First and foremost, the bailout enshrines the GOP deregulation doctrine of lessez faire-- or, let the chief market players decide what is best for the rest of the country.

Foreclosure-prevention actions-- such that they are-- were not part of the original Bush proposal. Under current federal practice, the relief provided by the Emergency Economic Stabilization Act (EESA) is on a case-by-case, voluntary basis.

EESA relief measures are not nearly as aggressive as bank foreclosures scheduled by the millions. The millions of Americans still at risk clearly got no attention in the flurry of debate about whether to award a blank check to Bush banking friends.

Apparently, the rich guys get a freight-train load of taxpayer dollars, but millions of Americans now facing foreclosure must beg the same banks for mercy.

[alphaa10000]

Edward1975 said, "... And to top it off, idiots elected a socialist president or will that be Czar"
--

The only "idiots" are those whose votes were cast to elect Bush, the one who blundered into a series of disasters from which this country will take years to recover.

What you know about socialism was read to you from a Faux News teleprompter, and that cannot be very much. Socialism has nothing to do with the debate on how America will dig itself out of the economic and fiscal chaos left by you of the GOP and your hero, George Bush.

The problem America faces, once again, is "capitalism for the elite", or lessez faire. To put it bluntly, lessez faire is unfair, and extremely unpatriotic. America''s economy is too important to be left entirely to the very bankers whose greed brought us this mess-- for which they ask us to pay.

Since you have ignorantly compared recovery efforts to installing a Tsar, you certainly will not understand apt advice for the GOP, Bernanke and Paulson-- in the words of Marie Antoinette-- "Let them eat their structured investment vehicles".

[antoniof123]

Posted by FromTexwLove at 08:46 AM : Nov 12, 2008

You are an idiot.

I will just give you a sample of the first few words.

During the administration of William Jefferson Clinton, the U.S. enjoyed more peace and economic well being than at any time in its history. He was the first Democratic president since Franklin D. Roosevelt to win a second term. He could point to the lowest unemployment rate in modern times, the lowest inflation in 30 years, the highest home ownership in the country''s history, dropping crime rates in many places, and reduced welfare rolls. He proposed the first balanced budget in decades and achieved a budget surplus. As part of a plan to celebrate the millennium in 2000, Clinton called for a great national initiative to end racial discrimination.

here is the web site. notice it is a gov web site that is for government if you right wing hacks could have chagned it you would have to bad it is the truth.

http://www.whitehouse.gov/history/presidents/bc42.html

[antoniof123]

AND you might want to read some more history...the debt/GDP ratio is at 3.7% which is LESS than it was after WWII...

Again, read some history or ****!

Posted by FromTexwLove at 08:50 AM : Nov 12, 2008

Let me see where did you get the information from that it was 3.8 percent.

US GDP is forcasted for 2008 as $14.684 trillion.
US Debt is at just over $10 trillion.

10/14.684 DOES NOT EQUAL 3.7 PERCENT IT IS EQUAL TO OVER 68 PERCENT.

Are all neo cons dumber than dirt and are they born that way or do they just go to a special school.

[au_fait]

i love the requirements. Be behind by three months and OWE AT LEAST 90 PERCENT OF THE VALUE. A bank should have never lent 90 percent of the value. That is where the trouble began. Thank you to the democrats and their belief''s in the 90''s that home ownership is a right and should be afforded to everyone.