Michael Barr, a Fellow at the Center for American Progress and Professor of Law at the University of Michigan, is available to discuss the economy, the mortgage crisis and the steps the Treasure Department may take in the coming days.
Washington, DC, USA, October 30, 2008 (PRESSbooth.ORG) -- Next Steps to Resolve the Mortgage Crisis:
There is bipartisan agreement today that stemming home foreclosures and restructuring troubled mortgages would slow the downward spiral harming financial institutions and the real American economy. The federal government possesses a range of tools to take action, but what’s missing is a way to persuade the mortgage servicers who control most of these loans on behalf of investors in mortgage-backed securities to restructure the loans themselves or sell the loans to the Department of the Treasury at a discount so these loans can be refinanced.
To date, Treasury’s efforts have failed. Owing a duty to countless investors with conflicting interests, servicers are paralyzed by fear of liability, restrictive tax and accounting rules, and the wrong financial incentives. What’s more, contracts typically bar servicers from selling underlying mortgage loans out of the loan pools that make up mortgage-backed securities. Instead, servicers are foreclosing at alarming rates, dragging down our economy with them.
By Michael Barr
Read the entire piece here:
http://www.americanprogress.org/issues/2008/10/next_steps.html
Contact:
John Neurohr,
202.481.8182
jneurohr @ americanprogress.org
Center for American Progress,
1333 H St. NW, Washington,
DC 20005-4707, USA
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