How involved should the federal government become with the mortgage and foreclosure crisis?
Marc Schwaber of Preferred Empire Mortgage says other measures, like asking lenders to make greater efforts to help their borrowers during these tough times, don't seem to be helping, so maybe federal help is the best bet.
“Maybe, if the government wanted to have a better plan, they could lend the money through a Ginnie Mae program, a government-backed program, and say we as the government are going to stand behind this particular loan,” says Schwaber.
The presidential hopefuls also think the federal government should have a role.
The mortgage crisis is still wreaking havoc across the country, but what are the presidential candidates planning to do about it? Lindley Pless has more.
Senator Hillary Clinton says the government should be ready to buy troubled mortgages if other steps fall short. Clinton supports legislation that would establish a federally-backed auction system for mortgages in default. She's also proposing a housing stimulus package to allow cities and states to purchase foreclosed properties.
Senator Barack Obama agrees that it is past time for the federal government to take action. He's co-sponsoring legislation creating a new FHA Housing Security Program to provide incentives for lenders to buy or refinance existing mortgages, and to convert them into stable 30-year fixed mortgages. He says his plan will provide a federal backstop for lenders to reduce the principal of loans that are priced higher than the value of a home.
Senator John McCain agrees the role of government is to help the truly needy and prevent systemic economic risk, but he says the best way to get there is to enact reforms that prevent a crisis like this from happening again. He’s against a multi-billion dollar bailout for big banks and speculators.
While the debate continues about whether or not federal bailout programs are appropriate, there already is some federal money making its way to New York by way of grants.
“We received a grant of approximately $800,000, which will go to help 20 organizations throughout the state,” says Priscilla Almodovar of the State of New York Mortgage Agency.
The State of New York Mortgage Agency recently announced that Federal Grant to Provide Foreclosure Prevention Counseling for New York City residents affected by sub-prime loans and predatory lending. The funds will be used to help counseling organizations build one-on-one relationships with those in need.
“Counselors are the ones who are on the front lines, they know their communities and we saw one of our purposes is to make sure they have the resources that they need to service their communities,” says Almodovar.