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THE US Treasury Department needs to take the same kind of aggressive steps to ease financial strains on homeowners that it took to guarantee the investments of banks and financial institutions. The economy can’t turn around until the housing market stabilizes. That requires a timely plan to stem mortgage defaults and foreclosures.
Debate is underway at Treasury on how best to craft loan modifications. But it is already clear what won’t help: the actions of irresponsible hedge funds that resist proposals to soften the terms of troubled home mortgages. Two such funds, Greenwich Financial Services and Braddock Financial Corporation, have advised their mortgage servicers to steer clear of government-sponsored efforts to renegotiate delinquent loans. It’s a disgraceful tactic by an industry that invites the toughest response from the House Financial Services Committee, which has scheduled a hearing on the matter on Nov. 12.
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