by Fred Tolleson

Created on: September 16, 2008   Last Updated: October 25, 2011

With the recent rush of financial problems in all sorts of financial markets - what should the Federal Reserve Board do? Several have suggested a rate decrease and other activities that would supposedly stabilize the real estate market. My personal opinion is that the real estate market is not going to be directly affected by these activities and we should go in another direction.

I think Senator Hillary Clinton had an excellent suggestion, when interviewed on ABC's Good Morning America program 9-16-08. She suggested that a 3 month moratorium on foreclosures be enacted so that all lenders and investors could stop all foreclosure activity. Then these same people need to step back from the "bar" and decide what they want to do - pull the mortgage and lose the earnings, re-negotiate a deal the borrower can handle, or some other step.

Ninety days is not too long a period of time for the industry to come up with a workable solution to the ever growing wave of foreclosures that will sweep across the country in growing quantity. We now learn that Lehman Brothers, Merrill Lynch, Washington Mutual, AIG and others are on the verge of losing control of their businesses. A cash deficit from mortgages that are not being paid upon is drying up the opportunity to make any meaningful deals.

What could occur is that payments could be suspended for 90 days to give homeowners an opportunity to re-gain financial control of their mortgage and other bills. They would be given this pause in payments with the understanding that a re-negotiated mortgage would be entered into at the conclusion of 90 days.

Congress could enact some meaningful legislation that would contain relief for the home owners and mortgage holders if they could just disregard politics for a few minutes and do what everybody sees as needed; but few in Congress have the courage to tread in these waters.

Sadly, many have seen this crisis coming for 2 years and are on record as asking for change in a timely manner. However, our Republican friends will only allow change the marketplace comes up with, to occur. Their reliance on the "marketplace" is what got us into this cancerous cavern of rotten loans in the first place. Time now to enact some strong legislation, pause the ongoing foreclosures and get some relief in the hands of the millions of homeowners who will be renters for a decade or two as they recover from this misadventure.

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