Stop the Repo Madness

What benefit is it to the average US taxpayer if housing is repossessed? Business decisions like these end up being paid for by all of us. If lenders make risky loans, it makes sense that they figure out a way to help the people they put into these homes to keep them.

From the BBC

The slowing housing market is a problem for lenders

A coalition of civil rights groups in the US has called on sub-prime lenders to stop repossessing borrowers' homes.

They want a six-month moratorium on foreclosures and say the industry should move borrowers onto loans with more favourable terms.

Sub-prime lenders provide loans such as mortgages to people with poor credit records, but they tend to charge higher rates of interest.

US sub-prime lender New Century filed for bankruptcy protection on Monday.

'Reckless and unaffordable'

The civil rights groups say that a predicted wave of foreclosures stems from "reckless and unaffordable loans", for which the lenders must bear some responsibility.

Without intervention, sub-prime foreclosures will impose the greatest drain on African-American and Latino wealth ever experienced in this country Hilary Shelton, National Association for the Advancement of Colored People

The National Council of La Raza, which campaigns on behalf of Hispanic Americans, says the problem is that most sub-prime loans start with favourable fixed interest rates that later change into adjustable-rate mortgages.

The group says that higher risk borrowers should be moved into sustainable 30-year fixed rates.

Adjustable rates have caused particular problems following two years of interest rate rises from the Federal Reserve between 2004 and 2006.