According to an article in the Star-Telegram, mortgage giants Fannie Mae and Freddie Mac , would topple over into bankruptcy without the lifeline of government funding that has poured into these behemoths since September 2008.The article said:
“The companies, created by the government to ensure the availability of home loans, have tapped about $96 billion in government aid since they were seized a year ago this weekend. Without that money, they could have gone broke, leaving millions of people unable to get a mortgage.”
The funny thing is that although these mortgage lenders and others have received billions of dollars in funding, millions of Americans are still unable to find necessary financing especially when it would save their home from foreclosure. Millions of Americans are either facing foreclosure or have already lost them homes, so where has the money gone? Why is it that only a fraction of homeowners facing foreclosure are able to secure loan modifications and only after they are at least one month behind on their mortgage payments? The amount of bailout money these mortgage lenders receive should be directly linked to the amount of homeowners they help avoid foreclosure . Right now, it’s a situation that allows mortgage lenders to receive taxpayer money while these very same taxpayers face foreclosure with only a few options for saving their homes and even most of those options depend on the “goodwill” of mortgage lenders.
It’s unfortunate that our legislators have failed to protect the interests of taxpayers and failed to stop the foreclosure crisis. Legislation introduced by Senator Dodd to allow mortgage modifications in bankruptcy would have gone a long way in slowing down this foreclosure crisis.