Yesterday, Treasury Secretary Geithner laid out new principles for a revamped bailout plan to restore stability and growth to our nation’s struggling economy. While Geithner’s pledge to ensure that every tax dollar would go to economic revitalization and lending was welcome news, few details were offered.
We hope homeowners on the brink of foreclosure won’t have to wait much longer for the federal government to take more aggressive steps to help them keep their homes.
The Secretary’s proposal suggests that the government will commit $50 billion in TARP funds to modify troubled mortgages in an effort to prevent foreclosures. But this may not be enough, and we don’t know how the plan will work because details won’t be available for another few weeks.
People like Langdon Mcalpin, a disabled and retired police officer from Loganville, Georgia, can’t wait much longer. He’s on the verge of losing his home of 19 years to foreclosure after he was sold an adjustable rate mortgage that he could not afford.
We need an immediate moratorium on all foreclosures. Congressman Barney Frank lent his support to that idea yesterday and called on lenders to halt all foreclosures until the federal government’s new mortgage modification plan is in place.
Other protections are needed to ensure that the federal government’s effort to keep people in their homes is a success. For instance, lenders should be required to modify mortgages so that monthly payments are no more than 38 percent of a borrower’s income, and they should allow flexibility for borrowers who have lost their jobs, incomes, or suffer other economic hardship. We also need to give bankruptcy judges the power to reduce the amount owed on a mortgage loan. More mortgage reforms are spelled out at DefendYourDollar.org
Every 13 seconds another home goes into foreclosure. And with each foreclosure, another family’s American dream comes crashing down. Some of their stories are captured in Consumers Union’s “Faces of Foreclosure,” video, which underscores how unfair mortgage lending practices got us into this mess.
President Obama and Secretary Geithner are moving in the right direction by recognizing that the federal government’s efforts to prevent foreclosures has been a failure so far and trying to change course. Now we need the details.