Rattling the begging bowl

30 October 2007 By Martin Hutchinson

Countrywide chairman Angelo Mozilo s call for a housing bailout is selfserving, since lenders created the mess. However electionyear images of sympathetic defaulters facing foreclosure in a declining market makes public support inevitable. The later, the better.

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Angelo Mozilo, chief Executive of Countrywide Financial, on October 29 criticized the US government response to the subprime mortgage collapse, saying there had been zero effort to tackle the crisis. He criticized the government's refusal to lift the $417,000 limit on Fannie Mae and Freddie Mac loans saying

Senator Hillary Clinton (D.NY) has promised to eliminate prepayment penalties on mortgage products, establish a $1bn fund to help homeowners facing foreclosure and another $1bn fund to support state and local housing trust funds.

According to the Joint Economic Committee of Congress, each new foreclosure costs stakeholders $80,000, including costs to homeowners, loan servicers, lenders, neighbours and local governments. The real estate website Realtytrac forecasts a total of 2m home foreclosures in 2007, up 65% on 2006.

The CaseShiller Monthly Home Price Index in August was down 5.0% on August 2006.

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