Foreclosure Assistance Will Largely Focus on Arizona, California, Florida and Nevada
The irony of the situation is that although the entire country will be shouldering the burden of the bailout, the foreclosure assistance will largely focus on the four states of Arizona, California, Florida and Nevada. It seems unfair to many that by being responsible and diligent they are now having to pay for the irresponsible behaviour of others.
Despite reservations and posturing the Senate released the second half of $350 billion. It had been preceded by assurances that a sizeable portion of the money would be utilized for stemming the tide of foreclosures and not for helping banks. This argument had finally won over many opposing lawmakers who were against the granting of money to the financial bodies. However the Bush government granted an extra $20 billion to prop up Bank of America.
Apart from the four states there are other regions where foreclosures are concentrated – Minneapolis, Detroit, Cleveland and some suburbs of Washington D.C. Most of the borrowers did not intentionally behave irresponsible – they were duped by predatory lending. This group definitely needs assistance.
Some opine that those who gain from government help must share with the latter any profits they might make in the future. Some pockets of foreclosure concentration are damaging the entire country. Sherman a Democrat comments, “Until the foreclosure disaster is solved, we’re going to be in a recession that will affect communities that have no foreclosures.”
In the tiny hamlets of Vermont the risky loans and consequent foreclosures are little known. The local banks have avoided the exotic mortgages – sub-prime loans that did not require income proof. Some of them were interest-only mortgages and many did not require down payment even. Chris D’Elia of Vermont Bankers Association said that they had been very conservative and this has saved them from the boom and the burst.
In North Dakota number of delinquent mortgages is less than 4.3%. The real estate market is thriving and in the last 18 years or so no bank has collapsed. The risky loans that over swept Las Vegas and Phoenix are “just completely foreign” to the residents of North Dakota said David Flynn of University of North Dakota. He said, “There is a real strong sense of questioning: Why we are helping people who made bad personal financial decisions when there are others who made more appropriate financial decisions.”
