Rescues for Homeowners in Debt Weighed
Can we afford this?
NYT-Prodded in part by some of the nation’s biggest banks, the Bush administration and Congress are considering costly new proposals for the government to rescue hundreds of thousands of homeowners whose mortgages are higher than the value of their houses.
Not since the Depression has a larger share of Americans owed more on their homes than they are worth. With the collapse of the housing boom, nearly 8.8 million homeowners, or 10.3 percent of the total, are underwater. That is more than double the percentage just a year ago, according to a new estimate of the damage by Moody’s Economy.com.
Administration officials say they still oppose any taxpayer bailout for either people who borrowed more than they could afford or banks that made foolish loans during the height of the speculative bubble in housing.
Recently, I heard that some “home equity,” lines of credit were frozen and “somehow” the home owner didn’t know it. They wrote checks on the equity account and they bounced.
Credit card interest rates have in some cases, jumped huge amounts.
quote:
Faced with mounting account delinquencies, major U.S. banks are penalizing credit-card customers late on payments by hiking their accounts to maximum default interest rates of 30% and more — even those with good credit records.
Default rates imposed for late payments, exceeding credit limits and bounced payment checks typically are levied on cardholders with poor credit scores, often incrementally. But state banking regulators and watchdog groups report a growing number of complaints of maximum default rates being imposed on erring customers with above-average credit scores of 700 and higher.
Market Watch
That means less money to spend on goods and services. So, while they try to save their own bottom line, they add to the problems the government has in getting people spending more.