Major Measures Being Taken by Federal Reserve to Prevent Foreclosures
A bold step was taken by the Federal Reserve to prevent further foreclosures that are threatening millions. It announced that troubled mortgages would be written off so as to enable people to stay in the houses that are their homes.
The measure would initially include assets worth $74 billion that had been held relating to the assistance given in the early part of 2008 to Bear Stearns and AIG. Ben Bernanke, the Federal Chairman said in a correspondence addressed to Rep. Barney Frank, the chairperson of the financial services committee of the House of Representatives, “The goal of the policy is to avoid preventable foreclosures on residential mortgage assets that are held, owned or controlled by a Federal Reserve Bank.
In 2008 the Fed was told that the $700 billion granted for bailout of banks must be utilized for the prevention of foreclosures. The steps taken to rescue Bear Stearns and AIG was not part of this bailout fund. President Obama said that a portion of the second half of the bailout money, which has now been sanctioned by the Congress this January, has to specifically deal with the foreclosure problem.
Economists apprehend that millions are facing foreclosure after the debacle in the housing market, the pushing up of unemployment and the resultant ongoing recession.
Barney Frank (Massachusetts-Democrat) has been in the forefront putting pressure on the Fed as well as the government to take more measures to tackle the foreclosure problem. He said that the recent step taken by the Federal Reserve was a “major breakthrough”. He added, “We just had very good news from Mr. Bernanke from the Federal Reserve, who has just announced a very significant increase in Federal Reserve policies to reduce foreclosures.”
According to RealtyTrac already 850,000 houses have been foreclosed upon and in this year of 2009 the number is expected to increase by about a million more. 2 million more will be entering the foreclosure process during this same time.
Christopher Dodd, chairperson of Senate Banking Committee lauded the recent step taken by the Federal Reserve. He said, “I am delighted to hear the news. I don’t know details of it yet. I am very encouraged by that. We’ve been trying to get, as you know, for some time in the previous administration (of President George W. Bush) for them to take steps on foreclosure mitigation. They refused to do so for whatever reason. I am very pleased that the Fed is stepping up.”
Related Posts
