The mortgage bailout plan is needed because
foreclosure rates in the United States are at an all-time high.
Hundreds of thousands of homeowners are expected to lose their
homes by 2012, and this will lead to tons of consumers who will
now have bad credit. This, in turn, can cause a major hit to
the economy and can potentially affect the stock market. Companies
such as Merrilly Lynch and Citibank have already taken huge
losses.
The right mortgage bailout plan can prevent
an economic disaster by allowing such homeowners to keep their
homes. The plan, by freezing mortgage interest rates, will prevent
an increase in monthly mortgage payments. This counteracts the
"balloon" effect that ARM loans have, and can potentally
solve the national crisis.
However, the mortgage bailout plan doesn't help
every homeowner - and there may be a need for the plan to be
extended to help more homeowners. Helping just a few may not
alleviate the potential threats that are at hand.
Real estate analysts say that the United States
needs a bailout plan for every homeowner with an ARM loan period.
They argue that the government allowed banks to be unfair and
irresponsible, and so the government should bail all of them
out. Logically, doing this would completely resolve the problem
- but create other problems amongst banks and their profitabilities.
