Federal Reserve Ignored Foreclosures

by Peter Vernon on Foreclosure Crisis

If only the Federal Reserve had paid attention to warnings about deregulation being unmanageable in 2006, it may have prevented the present slump of house foreclosure.

Putting an end to foreclosures at the present time is not the solution anymore, according to National Community Reinvestment Coalition President John Taylor.

According to Taylor, 10,000 properties everyday are being considered as foreclosed homes as compared to 1,000 properties per day at the time of the Great Depression.

In addition, he said that Litton Loan Servicing, Citibank and Bank of America could not modify mortgages considered as sub-prime.

He stated that for most banks, allowing mortgages to end up in foreclosure would be a trouble-free solution on their end because they will recover all losses to the investors instead of adjusting a loan in which they could lose some money.

The banks do not realize that they may initially lose some money, but will be on continuous flow when a mortgage could be compensated regularly once again.

The standard amount of loss in foreclosure is about $100,000 according to Taylor. The U.S. government has to obtain from well-known fields or through an offer that will not be declined; otherwise all hard work will be meaningless.

In addition, having the Obama administration to approve will be a great accomplishment.

Ex-Federal Reserve director Alan Greenspan is in firm denial to let the banks divulge anything except only for common information on such accounts like loans for a small business which, according to Taylor, is discouraging.

Greenspan wanted the banks to become 'color blind'. Taylor said that if a person approached them for business-type of loan, they are making that person not liable because they are not getting all information.

If this kind of situation continues to occur, then it looks like Illinois foreclosure would still have a long way to go before it goes back to its normal state once again.

disclaimer