by TDK

Created on: February 26, 2009   Last Updated: March 02, 2009

The most recent bailouts have failed miserably and added billions to the already mountainous National Debt. If the Government were to hand money to homeowners in foreclosure not only would the fix be temporary, but the system used to determine who receives the funds would be abused much like the FEMA funds after Hurricane Katrina. It is extremely difficult to regulate a program the size of a Forclosure Bailout simply because there is so much money going to so many people.

The U.S. Government should fix the flawed mortgage and lending systems that caused the housing crisis in the first place. Banks should not be able to lend or sell mortgages that are unaffordable to the purchasing parties. At one point anyone could get a loan or mortgage. All that was needed was a job, checking account and collatoral. Once this loose legged lending began occuring on a regular basis, homeowners were stuck with a bill that they could not pay.

Many defaulted or declared bancruptcy. Then banks did not get paid back the money that was lent and Lenders dipped in to the red as well. If the intial Red Flags were heeded three years ago when the Real Estate market was fat with overpriced homes than I belive that this crisis would not have occured. All the lenders had to do was pull back. The Real Estate companies could have dropped prices and offered affordable lending packages to thier buyers so that no one party would be swimming in debt.

By that time, the bubble had already burst and the structure began to systematically fail. The scheme as whole should be retooled in a way that not only aids homeowners but banks and Real Estate companies as well. The Government should reward responsible lending and borrowing practices by all parties by offering tax breaks to homeowners who pay thier mortgage loyally or giving banks incentives to lend responsibly. Once the banks and lenders have reformed their end, the Real Estate market will evolve. Perpetuating the Bailout culture created by the Bush administration only prolongs the economic problems that America is facing, and does not encourage banks and real estate companies to sharpen and adjust thier businesses to the changing market.

America should support it's homeowning citizens, but not bail them out. The recent Bank and Automotive baliouts reflect poorly to International investors and illustrates that America encourages and rewards failure. There are more productive solutions to ending the Mortgage Crisis.

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