According to the Government Accountability Office, the United States Treasury has received about $6.7 billion in dividend payments from its Troubled Assets Relief Program (TARP) investments to date. Barney Frank, the Democratic congressman from Massachusetts is proposing to use that money to prevent unemployed homeowners from losing their homes.
Jenifer McKim of the Boston Globe reported on July 9th that Frank’s proposal came “just days after the Federal Reserve Bank of Boston released a study that showed lenders are reluctant to modify mortgages of most delinquent borrowers because they either are likely to again have trouble making payments, or conversely, can fix their problems without financial help.” Hell, I could have told you that without doing a “study”, but the bottom line is, what is being done now is not enough to prevent more and more people from having to foreclose. Especially as the unemployment rate continues to rise.
McKim wrote that Frank’s proposal is to “spend $2 billion to prevent foreclosure on borrowers who don’t qualify for other mortgage aid programs because they are unemployed.” She then adds that, “Frank’s proposal would also spend $1 billion to build and preserve affordable housing, $1.5 billion to redevelop foreclosed and abandoned homes, and $2 billion to protect tenants in apartment buildings whose owners can’t pay the mortgage.”
Matthew Wurtzel of TheDeal.com questions the proposal writing, “There is no indication of how the loans would be administered and paid to the mortgage lender. Will it go straight to the lender, never to be touched by the homeowner? After all, some of these troubled homeowners aren’t simply in trouble because they lost their jobs, but instead may have made some bad financial decisions. What’s to stop someone from squandering the money other than the threat of foreclosure?” A fair point indeed, but again, what is being done now is obviously not working. There needs to be something more. Yes, there are details to be fine tuned, and gray areas like these need to be addressed. But optimistic as I am, I can’t help but get behind a guy like Barney Frank. Every interview I’ve ever heard or read with the man impresses me by his clear thinking his obvious desire to make this country better.
Here’s a CNN Money interview with him: