Thoughts On “Mortgage Aid Leaves Some Borrowers Worse Off”
Yes some loans should not have been issued, regulators failed to control the banks with the laws that were on the books, now we get a new set of rules…which might also be ignored by the banks. Never the less, banks and lending agencies were making a handy profit peddling the collateralized instruments to all comers. When the business fails, the Federal government bails the banks out and leaves the consumer advice to fend for themselves. Please recall that the banks not only govern the interest rates of the mortgages, but also via the bank credit card associations, they also control the 29.9% interest rates that those consumers are being charged, money that would otherwise be going to pay for the mortgages is now going to pay for credit cards, the outcome for the banks is the same, they either get the house or they get the credit card payment. If anything, the Federal Reserve should set up a Consumer Debt Resolution Trust system to buy consumer debts from the bank, reprice it, package and then resell it back as structured debt back to the marketplace, thus relieving the consumer of much of their unsecured debts without having to go to bankruptcy and setting the consumer up to pay directly to the Federal Treasury on a low interest installement debt process.
