Sheila Blair – the government’s top official on the banking crisis – is warning that if homeowners don’t get more help soon, we’re all in trouble.
There simply isn’t enough help for troubled homeowners to keep up with the number of foreclosures happening every day, she says. Many economic experts agree that the housing mess is the root of our economic and financial problems now – the problems that the government is shoveling billions of dollars into in order to stave off disaster.
“We’re definitely behind the curve, and we fall further behind the curve every day,” the FDIC chairwoman told an audience at the Fortune 500 Forum in Washington, D.C., reports CNN Money.
Blair said we’d be better off today if anyone listened to her earlier warnings about mortgage modification more than two years ago. Back then, she said lenders had to bank some capital reserves to offset risky loans, and to modify those now-toxic mortgages so borrowers can stay in their homes, not be kicked out of them.
The Bush administration has led an effort to help 2.7 million homeowners keep their prized possession since July 2007, but they need more help. Nearly 280,000 homeowners received some sort of threatening notice in October alone.
“The legal authority is there to modify loans, but there are conflicting economic interests on the part of investors [in mortgage-backed securities],” Bair said at the Fortune 500 Forum. “The sooner we do it [more foreclosure prevention initiatives] the better.”
“I see higher delinquencies growing through 2010.”
Meanwhile, Treasury Secretary Hank Paulson is debating whether to ask Congress for the second installment of the $700 billion bailout package, reports The Wall Street Journal. The conflict involves several issues – one is that there’s a new administration coming into office which may have its own ideas on how to use the money. The other is that some lawmakers, particularly Democrats, want that money to be used for things like homeowner help and an auto industry bailout – the latter of which the Bush administration opposes.