According to an article in the Dallas Morning News, President Obama has proposed sweeping changes in how our financial system is regulated. The President’s regulation plan, if approved, would give new powers to the Federal Reserve allowing it to oversee the entire financial system and would also create a new consumer protection agency designed to protect Americans from credit abuse.
The article quoted the President:
“Mortgage brokers will be held to higher standards, exotic mortgages that hide exploding costs will no longer be the norm, home mortgage disclosures will be reasonable, clearly written, and concise,” Obama said.
It has been those exploding mortgage costs that have for the most part driven the foreclosure rate sky-high along with bankruptcy filings. Many consumers are vulnerable to unscrupulous lenders who push sophisticated and often damaging “loan products” to those who can least afford it.
Homeowners facing foreclosure on a massive scale is a damaging blow to the very foundation of our society. Massive amounts of foreclosure equal societal instability and societal instability will quickly erode the safety and functionality of our communities.
Our current foreclosure crisis is a sign that there are problems in the way some mortgage products are setup. Many of these toxic mortgages are endangering the financial health of many homeowners and renters alike. Hopefully, these new changes will make a difference and reduce the number of future foreclosures caused by these toxic loans.