Financial Bailout Plan Not Enough

by Holly
(Louisville, KY, USA)

The financial bailout plan passed recently by Congress will not succeed in revitalizing our failing American markets. The Financial Rescue Plan fails to address the the primary underlying causes of our current situation.

First, the bailout plan fails to address predatory lending practices in the mortgage market. The mortgage market needs common sense regulations that will prevent lenders from extending credit to those who cannot afford to repay the loans, and who are not required to show proof of income and ability to repay as part of the loan approval process.

Additionally, there were some borrowers who were harmed by lenders who failed to reveal better available loan products. Such lenders were more concerned about the return on the loan than on giving the borrower information to make the best decision for the borrower's needs.

Second, the plan fails to address families that are in danger of losing their homes in foreclosure. When homes are foreclosed on in a neighborhood, it drives all the home values down in the area. This creates a paralysis in the market where homeowners do not wish to sell in the current market, which means fewer homes being bought as well.

Families who lose their homes often have trouble finding a new place to live. It's both sympathetic and smart to take action to ensure families may be able to make good on their mortgage loans.

One way this could easily be done is to pass legislation that would enable bankruptcy judges to modify the terms of a loan, the interest rate, type of loan, and to roll all past due payments back into the total value of the mortgage.

Another possibility is to allow some families to request their mortgage loan be reduced to the new value of the home, and payments adjusted accordingly.

And finally, a plan that would federally insure more mortgages would bolster confidence in the mortgage market.

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