http://money.cnn.com/2012/02/24/real_estate/donovan_mortgage_settlement/index.htm?iid=HP_LN
As an effort to "stop the neighborhood from burning down" President Obama and Secretary of Housing and Urban Development Shaun Donovan have engineered another plan to help homeowners who have either been foreclosed upon or are currently living in an "underwater" home. The settlement is $25 billion in relief for homeowners. $2,000 will go to homeowners who were unjustly removed from their homes.
Among other things included in the deal were a "bill of rights" for homeowners. They would be entitled to receiving help from their lenders among other things. This is a response to the way banks often treated borrows while the borrowers were in trouble. It was often found that banks did not help their borrowers or even inform the borrowers that they were in trouble.
This move is in a lot of ways symbolic. $2000 dollars will not help families without homes. The move is there to create a legal base to show the Federal Government will help families struggling and how the Federal Government will no longer tolerate the actions of banks who treat their borrowers poorly.
Something of a move away from Laissez-faire Capitalism.
2 comments:
This is an interesting form of government intervention in a market. There have been an increasing amount of foreclosures and people losing homes but I don’t know if a direct contribution to homeowners in the form assisted funding is the right call to action. This may provoke owners to over claim their struggles paying mortgage while spending their income else where, knowing they will recieve government assistance with paying their mortgage. Yes, help is needed but I don’t think this is the answer.
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