Foreclosures Would Cost More than Keeping People in Their Homes

The U.S. Treasury Department has already used billions of dollars from the $700 federal bailout fund called the Troubled Asset Relief Program (TARP) to help banking giants and financial institutions deal with the current financial crisis.

However, several sectors have criticized the government for these actions, blaming them for not taking direct actions in dealing with the root cause of the problem — foreclosures. Treasury Secretary has defended the government's action to use the bailout money for banks saying that the TARP was designed for investments and not spending, where giving direct financial support to homeowners facing foreclosures would be classified.

Foreclosure properties have flooded the market. This has brought a frightening decrease in home property values and putting more families at risk. The previous actions by the federal government to stem this tide of foreclosures have proven ineffective in stopping this flow.

The Housing and Urban Development's Hope for Homeowners program, which was established to prevent foreclosures, has only attracted 111 applicants as compared to the millions of homeowners facing foreclosures.

Community organizations are pushing for loan modifications as a solution to the current crisis. They have argued that it would cost the government and everyone else more in allowing foreclosures to happen than bailing out homeowners and keeping them in their homes.

They are relying on a report by the Communities Creating Opportunity which indicated that a foreclosure would cost $80,000 with banks taking the brunt, together with losses for the state, cities, communities and homeowners. It is a far cry from $3,300 which is the amount needed to modify a loan.

Representatives and leaders from faith-based organizations are seeking a discussion with the Treasury secretary to discuss the foreclosure crisis and to urge the government for some direct action. They will push for the loan modification plan put forward by FDIC's Sheila Bair which will require part of the bailout money as a guarantee to banks. Keeping families in their homes is a top priority, and finalizing concrete actions is critical for this to happen.