Fed Asked to Contain Foreclosed Homes Auctions in Iowa
Approximately 200 homeowners attended a meeting held in Des Moines, Iowa by the nonprofit Iowa Citizens for Community Improvement with representatives from the Federal Reserve this week.
The meeting was one of 9 Fed meetings planned across the country to help step up the involvement of the Federal Reserve in containing foreclosed homes auctions. At the Des Moines meeting, Fed officials listened quietly as speakers expressed their frustration at the failure of the federal government to prevent banks from providing predatory loans.
George Goehl, head of the National People’s Action of Chicago which works with CCI, said the Fed, which was supposed to supervise banks, failed to do its job.
The Fed representatives affirmed the power of the country’s central bank and admitted they can do more. They promised to consider the proposals brought out during the meeting.
One of the proposals is to force all Iowa banks that have received federal bailouts to use the money for loan modifications. Housing advocates reiterated that banks can earn more if loan modifications are successful than if mortgages go into foreclosure.
Last month, the country’s largest lenders and mortgage servicers were required by the Treasury Department to modify at least 500,000 home loans by December 1. They have the $700 billion bailout money to make loan modifications possible, according to advocates.
However, according to some analysts, loan modifications are viable for only around 20 percent of troubled mortgages. According to reports from the Federal Reserve Bank of Boston and other foreclosure reports, more than half of borrowers whose home loans were modified have redefaulted.
During the meeting, Iowa Attorney General Tom Miller tried to pacify angry homeowners by saying that Iowans should not put all the blame on the Fed. It has been doing a lot of effective measures, such as the prohibition of lenders from giving incentives to real estate agents and then adding the cost to borrowers.
In response, Iowan housing advocates appreciated the efforts of the Fed to send its representatives around the country to listen to ordinary Americans.
At the meeting, Fed officials were able to listen to an 81-year-old widow who expressed his frustration at the loss of his retirement savings. He said that if only financial officials did their job in creating and in enforcing stricter regulations, his savings would have been enough for him to go on living without being a burden to his loved ones.
