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Sunday, September 21, 2008

The federal bailout of Wall Street

The lack of foresight with regards to mortgages has forced the federal government to step in and bail out the financial institutions. This does not directly stem from what the individuals looking for loans have done but rather what some lenders have done in order to make a quick dollar from both the individual they get the loan for but also the institution that they get to buy the loan.

The mess may not have happened or may have been less severe if the predatory lenders didn't find ways of getting the individuals and couples to leave their financial information blank so they could play with the numbers to get the people loans that they realistically could not afford

Where the federal government has to bail out these financial institutions, there should be safeguards for both the individual who gets the loan and the financial institutions that maintain the mortgage note. This would include the rewriting of the terms of the loans to protect both sides if the individual in the event that the individual is making every attempt to pay but through no fault of their own starts having problems paying, i.e. inflation rising faster than their pay, etc...

The financial institutions don't really want the property since they would be the ones who would be the ones required to maintain the property until sold and are forced to take a lose if they can't sell the house for the value of the mortgage note. At the same time the communities don't want to see a home that has become abandoned and neglected due to the family being forced to move out due to a foreclosure due to it bringing down the look of the neighborhood and the value of the surrounding homes.

The one real question is: Will we learn from what happened in the aftermath of the sub-prime mortgage lending problem?

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