Updated March 28 at 10:28am

Who should be responsible for helping homeowners who default on their mortgages?


The last two years have been a very painful reckoning for individuals and financial institutions that engaged in risky behavior.

The individuals signed for loans that in many cases they could not afford on the assumption that rising real estate prices would allow them to re-finance the loans and they could flip themselves into a strong financial position.

The banks and brokers making loans granted them to people who provided no tangible evidence that they could re-pay the loans, all on the assumption that they could sell the loans into the capital markets and pocket the transaction fees without having to deal with the likely defaults.

Unfortunately, the way out of this massive Ponzi scheme requires either a continuing wave of foreclosures, which threaten to undo both banks and homeowners (whether or not they are directly involved in the collapse of the housing market), or modification of the loans, with banks, homeowners and taxpayers suffering.

Where do you stand on this issue?


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I cant believe you are even asking this. The homeowner is responsible . Period.

Michael g Riley

Thursday, February 26, 2009 | Report this

TARP (Troubled Asset Relief Program), of course, went from being an asset purchase program to a capital investment program and therefore needs a new name. Under the Treasury program, the government will invest $250 billion in the nation’s banks. A Treasury spokesperson says $158 billion has already been committed with another $92 billion to go. The hope is that new capital will get banks lending again. And many small banks, major small business lenders, are lining up now.

But here’s the rub: In section 5.3 of the agreement there is language that says if Congress wants to put new conditions or requirements on the banks, those new terms can be applied retroactively to banks who took the money. So in January if Congress wants to require banks that have received capital stop foreclosing on homes or up their lending activity, they can.


Thursday, February 26, 2009 | Report this
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