Congress Pressurizing Government About Foreclosures

Posted in Foreclosures, November 5th, 2007 |

Pressure was put on the Bush administration on Friday 2nd November to step up its efforts regarding the foreclosure crisis. Barney Frank, the chairperson of House Financial Services together with other Democrats underlined the point that times were bad with statistics showing 2 million units about to foreclose. Time and speed were two important factors. Frank wanted to know why the government was not supporting a plan put forward by the head of Federal Deposit Insurance Corp., Sheila Blair about mortgage firms converting the mortgages to the fixed rate category if the borrowers had not yet gone into default and were occupants of the house in question.

Robert K. Steel, Treasury Undersecretary, parried the question by saying that the beneficial suggestions were being looked in to. He did not categorically support the line of approach taken by Bair.
Another Democrat, Gwen Moore expressed her concern about the slow reaction of the mortgage sector to the crisis and not expediting the process of refinancing. She posed a blunt question to the administration about what they were actually doing to help the people victimized by foreclosure fiasco.

On their part Steel and the assistant secretary of HUD Brian D. Montgomery who also is the head of Federal Housing Administration explained that the government was working in tandem with the industry groups by sending mass mails to those affected by impending foreclosures. Advertising has also been increased and toll free telephone hot lines have been opened to facilitate contact and counseling. In November 200,000 letters are scheduled to be dispatched by a newly set up group HOPE NOW. These were just starters before launching all out efforts.

But Democrats continue to be critical by accusing the administration to be dictated by the industry sector. The offers extended by the government are inadequate and insufficient considering the jumbo size of the foreclosure crisis. The forthcoming two years are critical and yet very little is being done to combat the approaching danger.

Steel’s reply was the Treasury Secretary Henry Paulson and other personnel under the instructions of the President were hammering out the problem day and night – it being the biggest threat to the economy.

The government reported that the annual economy had increased at a rate of 3.9% during the last third quarter but economists are uneasy and predict a recession because of the foreclosure debacle.