Government Considers Guaranteeing Mortgages

Sounds like the federal government is finally starting to think of troubled homeowners instead of Wall Street. If they pull their heads out of their backsides they may actually do something to help homeowners.

The Washington Post is reporting that the Treasury Dept. is considering using some of the $700 billion bailout rescue package to guarantee mortgages, hopefully stemming the tide of foreclosures.

Washington Post The federal government may start guaranteeing home mortgages to persuade lenders to ease the monthly financial burden on struggling homeowners, Federal Deposit Insurance Corp. Chairman Sheila C. Bair said yesterday.

Unfortunately the report only says the fedral government “may” start guaranteeing home mortgages. While I think this is a step in the right direction the first thought that came to my mind was, “Its about d@mn time!!” The other thing that bothers me is the phrase “persuade lenders”, wouldn’t you think that after bailing out these lenders with $700 billion in tax payer dollars the government would demand the lenders help struggling homeowners?

Washington Post The rescue legislation approved last month requires the government, as it acquires mortgages or mortgage-backed securities, to “implement a plan” to “maximize assistance for homeowners.” The bill also requires the government to encourage lenders to adopt programs that minimize foreclosures. But the exact measures the government will take in that regard have not been disclosed.

There’s that phrase again, “encourage lenders”.

Another fear I have is that with the election only 2 weeks away and the holidays all but upon us that Congress wont get anything done until after the first of the year. That would mean another 3 months of inaction. From my point of view we have a government that has been and continues to be slow to react, fails to think ahead of the curve and is unwilling to demand that those most culpable for the mortgage crisis get inline and do their part to fix this mess.