According to the New York Times editorial last June 28, the current foreclosure crisis that the state is suffering from may benefit from the Bear Stearns hedge fund debacle. These hedge funds, which almost collapsed a couple of weeks ago, were believed to be tied to numerous subprime mortgages. These mortgages are being blamed for the rise in New York foreclosures rate. And to ensure that there is no danger to the financial system; Congress has decided to intervene on behalf of Wall Street.
The decision of the Congress to help out businesses with similar investments has received much criticism. Many are asking why the government should bail out these businesses when Wall Street played a major role in the issuance of these risky mortgages to subprime borrowers, resulting to thousands of New York foreclosure homes. In addition to this, these Wall Street firms have already profited from such unfortunate situation by packaging the mortgages as investments, which they offered to their hedge fund clients.
Now, as the country suffers from record-high home foreclosures rate, with the national government providing no form of relief, Congress is worried about the possibility of an economic meltdown. Similar investments by Wall Street firms have amounted to $500 billion and if these investments tank, the American people would receive the sharp end. With such uncomfortable situation, Congress has no choice but to offer its hands to these firms and indirectly improve the New York foreclosures situation.
Many financial experts believed that this will not be the end of the foreclosures fiasco as long as the lending regulations are as relaxed as ever. On the other hand, lenders are arguing that tightening underwriting guidelines would affect their business. They also believe that not every lender is guilty of predatory lending practices and only those who are should be punished.
More Resources:
- Foreclosure Homes
- Foreclosure Homes in California
- Michigan Foreclosure Homes
- Texas Foreclosure Homes
- Foreclosure Homes in Virginia
- Georgia Foreclosure List
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