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President Tries to Help Homeowners Avoid Default

[Sep 19, 2007.]

 

President George W. Bush is taking action to try to prevent homeowners who took out subprime mortgages from going into default.

Some observers believe the action is long overdue, given the current housing crisis. Economists have said the housing situation threatens to throw the economy into a tailspin, resulting in recession.

Defaults have been on the rise, especially among those with subprime mortgages. Subprime mortgages are typically extended to individuals with shaky credit histories. It's predicted that consumers may scale back their spending in response to the housing crisis, a situation which could have a ripple effect throughout the entire economy.

The President wants homeowners to be able to change the terms of their loans so that they can avoid default. Some special products may also assist consumers in avoiding home loss.

Meanwhile, Democrats are blaming the Bush Administration for failing to enforce regulations that could help homeowners avoid default. As a result of the political dispute over the current housing mess, the issue could emerge as a topic of discussion in the race for President. The default rate threatens to climb in 2008, in the heat of the Presidential campaign.

Some observers have criticized the chairman of the Federal Reserve, Ben Bernanke, for failing to take steps to alleviate the credit crisis.
Meanwhile, attention is being focused on the Federal Housing Administration, which was formed in the midst of the Great Depression, when millions of Americans became homeless. The FHA is responsible for promoting home ownership by backing mortgages, especially for those Americans who lack the income to secure conventional loans.

Experts now predict that the housing crisis will continue well into 2008.
Fortunately, so far, the housing situation has not led to an all-out recession. However, the impact of the mortgage crisis may be felt in industries which help to support the real estate and construction industries.

Julie Ann Amos
September 19th 2007

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