Bailout For Mortgage Holders Unlikely To Come Soon

by Darren

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Lately there has been some good news for mortgage holders. The idea is that the government is listening, and something may end up being done to alleviate the suffering. The bad news is, it probably won’t be fast, and may not come in time for the millions of people in danger of being foreclosed on from bad mortgage deals. There are 1 to 3 million people at immediate risk.

“We may have as many as 1 million to 3 million people who could lose their homes, not because they lost their jobs, not because the economy collapsed, but because they got bad deals on mortgages,” said Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee.

House and Senate lawmakers are working on different plans to help Americans out of the mortgage crisis, none of which seems ready for a prime-time signing by President Bush. Dodd acknowledged as much last week as he urged the White House to take action, despite all the mortgage-related legislation his committee has planned for the fall.

“Those matters will take a little more time,” Dodd said.

The credit troubles have been hammering away at faith in the financial system, and there are billions of investment dollars still at risk because hedge funds invested so heavily in subprime mortgages in order to take advantage of the high risk and high reward opportunities associated with them. Now the proverbial crows are coming home to roost and the fallout has left many shaken.

“First and foremost, we need people on the ground to help innocent mortgagors, innocent homeowners refinance when they’re on the edge of foreclosure and yet they have the wherewithal for refinancing,” said Sen. Charles Schumer, D-N.Y., who sits on the Senate Banking Committee. “Somebody’s got to fill that void.”

While the Senate is working on that, Rep. Barney Frank, chairman of the House Financial Services Committee, will hold a Sept. 5 inquiry on credit ratings agencies like Standard & Poor’s Corp., Moody’s Investors Service Inc. and Fitch Ratings. Such rating agencies have been criticized for not properly evaluating the risks of bonds backed by mortgages given to borrowers with weak credit.

There is no clear consensus on what needs to be done. If you’re still struggling with making mortgage payments, you’ll have to continue to grit it out for the foreseeable future.

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