The Federal Reserve Board has repeatedly tried since September to contain the foreclosure crisis damage that's spreading rapidly into the general economy. It has lowered key interest rates a half dozen times and, to quote the Wall Street Journal, "undertaken the broadest expansions of its lending authority since the 1930s." The most dramatic action, however, came last weekend as the Federal Reserve orchestrated a bailout of Bear Stearns, one of the main financial firms responsible for causing this subprime mortgage mess in the first place.

Bear Stearns has been one of the most aggressive funders and servicers of the abusive, unfair subprime mortgages that are now pushing the country to the brink of recession.

In keeping Bear Stearns solvent, the Federal Reserve acted to avert a domino effect it feared could spark a wider financial market meltdown. But if a firm that's partially to blame for this crisis warrants help, then surely so do millions of ordinary families who are struggling to keep their homes. Consumer spending accounts for 70 percent of economic activity in this country. As such, individuals are the backbone of the country's economic well-being, as much as or more so than large but reckless Wall Street lenders and investors.

More than 2 million families who've been sold unfair, deceptive home loans will face foreclosure in the next 24 to 36 months. An additional 40 million families who live in surrounding neighborhoods will see their property values plummet by $350 billion as a result. Communities will see tax bases erode further. For the common good, federal officials need to act fast to find solutions for working families and neighborhoods: Averting foreclosures on Main Street would not only help families and neighborhoods, but would also benefit Wall Street by avoiding further losses to lenders and investors.

The U.S. Treasury's plan for lenders to voluntarily modify home loans to affordable terms is failing to keep up with new foreclosures, just as a request for voluntary help for Bear Stearns would have been insufficient. To stop the wave of foreclosures, the Bush administration needs to support and Congress must pass a targeted change in law to permit bankruptcy judges to make limited adjustments to mortgages.

Judges now can make changes on mortgages for vacation homes and commercial properties----current law puts only home loans on primary residences out of reach. Bills now under consideration the U.S. House and Senate allowing court-supervised loan modifications in cases where foreclosure is the only other option could keep 600,000 families in their homes. And it would not cost taxpayers a dime.

But that won't be enough; this massive problem requires more than one approach. We also need to implement proposals to expand FHA loan programs to help defaulting borrowers refinance, and quickly.

If massive foreclosures continue, states and communities and individuals all over the nation will suffer economic damage for years to come. Congress and the White House must support legislation to allow families relief through the courts and work to find additional ways to bring much needed help to struggling homeowners.

For more information: Kathleen Day at(202) 349-1871 or kathleen.day@responsiblelending.org; Sharon Reuss at (919) 313-8527 or sharon.reuss@responsiblelending.org; or Ginna Green at (510) 379-5513 or ginna.green@responsiblelending.org.

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