White House Help For Foreclosure Crisis

Bush has given his signature on mortgage legislation, which aims to give financial relief to foreclosure victims. Hitherto if a mortgage debt was forgiven then it was considered to be income as it was taken to be a gain. But that will no longer be applicable – forgiven debts will not be taxed. Bush said that one is ‘worried about making’ payments. Higher taxes are insulting. Bush hopes that this step will make it a happy holiday season for the house owners threatened by foreclosures. The step is not without hiccups. It will cause the government loss of revenue running into millions but that will be offset by putting a limit to tax holidays enjoyed by owners who sold second houses.

The mortgage crisis, which came into focus last spring, threw a cloud over the economy. Foreclosures rode rough shod over the country. Its pace has not been brought under control yet. The bill was the government’s reaction to the imperative crisis that just could not be ignored considering the huge number of foreclosures. It is not just the borrowers – many lenders have downed shutters and investors are badly hit with jumbo losses.

It is calculated that about 2.5 million adjustable-rate mortgages valued to be worth approximately $600 billion is ready to jump to a higher niche This will make it impossible for many to keep the mortgage running. Inevitably they will be served foreclosure notices. That does not bode well for society at large and the economy in general.

The loan culture has landed the country in this situation. It is being exported across the globe too. Some had reasoned that loans would allow money to enter the market, push up sales and make everybody happy. Today it has made everybody unhappy – and not just the borrowers. Those evicted from foreclosed houses do not vanish into thin air – they crowd around rental accommodation or put up at state run homes. That puts a pressure on state funds. The disgruntled section – a huge chunk – is not good for the health of any society. Too many houses tagged by foreclosures have resulted in a glut in the real estate market. Buyers are hard to get. Often the value of the house is less than the lien on it. The abandoned houses attract criminals as well as snakes, frogs, algae and mosquitoes. Disease has already started to take toll.