John Edwards stated he wishes to create a federal bail out for homeowners facing forclosure, is this good?

Answer 1

A bail out for either the lenders or the borrowers is the last thing the feds should do. It will only reward bad behavior, and the law of unintended consequences will take over.

Answer 2

There is a reason why loan companies have a "RISK" department. Loan are risky. It up to the financial company to do their homework before approving a loan. I think if a safety net is there for consumers, more would try to default. Isn't that the reason why claiming bankruptcy had to be changed.

I have a family member who is thisclose to foreclosing on their house. They put themselves in this position by overspending to make the house the best on the block. It was completely irresponsible and immature spending. The debt is more than 200,000 more then the value of the home. Why should my taxes bail out this couple, or the company who did not do their job and loan them money over the value of the home.

Answer 3

It's not good--but t may be necessay. Here's why (part of the rationale):

Granted, under ideal circumstances, we should let the market rule. But--this is clearly a case of market failure--the overextension of credit in an unsustainable way. A bailout can take several forms--and there are several options that frankly won't cost much. So-it's a very feasible approach that can be justified, even in terms of neoclassical economics.

More important--the consequences of really large foreclosures are profound. Massive numbers of foreclosed homes coming on the market will kill any chance of the housing market recovering for a long time. Credit institutions will bepushed even harder than they are now--and many will fail. That means a general cutting back on credit--affectng the car industry, among others--and reducing consumer bbuying power. Adde to that the numbers of families who have lost their homes and must try to recover.

We aare headed for a moderate recession in any case, largey as a result of Bush's deficit spending, trade, and energy poliicies. Add this to the mix and you have all the makings of a very deep, extended recession. Intervention in the housing market such as Edwards suggests early on (now) can ease this considerably.

Answer 4

Well, I think predatory lending was a major culprit.


If we could effectively prosecute some of these lenders and use the forfeited fines to fund a low interest loan bail-out, whereby affected folks can secure affordable housing, yet still pay for it, then it may be beneficial to our economy.

Answer 5

Better to aid the borrowers than to bail out these multi-million dollar lending companies... a good portion of whom are in trouble due to their predatory practice of selling subprime mortgages.

Answer 6

Yes, I think so, it's better to bail out the people facing foreclosure so they can keep their homes than bailing out the loan companies.

Answer 7

i want to know how he is going to prevent that from bailing out fat Wall St. types who knew they were making bad loans.

one estimate I saw places the likely volume of such loans at 400 to 500 billion. Does Edwards want to give that much money to Wall St.?


so far, he can't do that, so i'm thinking he's full of it (as usual).

:-)

Answer 8

Funny for a man who is an owner in a corporation foreclosing on homeowners.

Answer 9

Another vote buying scheme. Anything that increases the size and scope of government diminishes freedom and responsibility.

Answer 10

It certainly would be cheaper than the 29 Billion $ bailout of the mortgage lending industry.