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Legislator Called for Wide Reforms to Prevent Foreclosed Homes

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By : John Cutts    99 or more times read
Alabama legislator Richard Shelby has criticized the Democrats’ plan to improve the country’s financial industry in an effort to prevent foreclosed homes numbers from rising. According to Shelby, the plan is flawed since it failed to properly control government-sponsored enterprises, Freddie Mac and Fannie Mae.

Shelby further added that the legislation for reforming the financial industry has touched almost every aspect of the economy, but failed to address the problem of the two mortgage companies which, according to him, contributed greatly to the ongoing foreclosure crisis by creating high demands for risky loans and by inflating the housing market bubble. The Alabama Senator has criticized Democrats for allegedly preventing reform plans for Fannie Mae and Freddie Mac over the years.

U.S. legislators have stated that the planned changes in the rules governing the financial and banking industry are meant to prevent another economic meltdown similar to the 2008 crisis that almost brought down Wall Street.

The legislative bill aims to create a group of regulators who will oversee financial system risks and set up a strategy to liquidate businesses that are too interconnected or too big to undergo bankruptcy.

The council of regulators will also create a bureau for consumer protection to regulate lending and bring into government oversight complex securities that were previously unregulated. The proposed changes in lending rules are also meant to prevent foreclosed homes statistics from rising further.

The bill is still under debate at the Senate, while the House has already passed legislation similar to the proposed bill in December 2009. Meanwhile, the administration of President Obama has somewhat touched upon the issue of Freddie Mac and Fannie Mae when it stated that it is still too early to implement wholesale reforms in the financing system of the housing market.

Shelby, along with other Republican legislators like John McCain and Judd Gregg, have called on the government to relinquish control of Fannie Mae and Freddie Mac and take definitive actions to get out of the mortgage finance business. The recommendation, if it becomes a reality, will repeal Freddie Mac and Fannie’s mandates to promote low-priced housing.

Senator Shelby has criticized the bill designed to overhaul the financial and lending industry and prevent foreclosed homes numbers from expanding. He stated that the bill should include Freddie Mac and Fannie Mae reforms.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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