Unemployed House Owners at risk From Foreclosure Will get TARP Loans

December 11th, 2009

Barney Frank recently said that he is trying to materialize a plan to make use of some the interest that the government gets from the bailout funds given to financial bodies to advance loans to unemployed houses owners who are at risk from foreclosure.

Many have criticized the administration for not doing enough for those house owners who cannot continue with the mortgage payments because they do not have jobs. A Congressional Oversight Panel reported that the programme amounting to $50 billion “was not designed to address foreclosures caused by unemployment.” Today the issue of unemployment is one of the main causes for foreclosures.

Barney Frank (Democrat/Massachusetts) is also the chairperson of the House Financial Services Committee sad that he approved of giving government assistance like federal loans to house owners who did not have jobs. They would be helped until they got employed. He said, “These are people who are very responsible, very thoughtful. They got a home, it’s above water, they’ve got equity, but they’re unemployed, and you can’t afford mortgage payments on unemployment.”

Frank explained that the plan would be funded from the interest the government got from the bailout funds (TARP) given to the banks. This is part of a bill that had been initiated in September – Main Street Tarp Bill. Loan would be granted to those homeowners who had become unemployed but had prospects of resuming their earnings ahead of them. The loans would run for 12 months with the provision that if required it would be extended for another year.

A spokesperson did not want to comment on the proposals put forward by Frank. In Washington many of the legislators have been critical about the slow progress of the loans. Senator Jack Reed said that he has been thinking about ways to push forward the loan modification plans. He expressed concern about the tardy progress of the Obama modification assistance measures have not been speedily operating in his own state of Rhode Island. 13% of the house owners in his state were in some state of foreclosure as noted till 30th June. It is the same as the national statistics observed the Mortgage Bankers Association.

Reed observed that it was unemployment that was now the prime cause of unemployment. Increasing number of persons with good credit scores were losing their jobs because of losing their jobs.