Tim Geithner was very sympathetic towards some of the homeowners of the huge number houses that have been foreclosed upon recently.
Speaking to Black Enterprise magazine, Geithner said that it’s not always the homeowner’s fault when he or she is foreclosed on. Sometimes it’s his neighbours’ fault, and other times, the owner was taken advantage of during the loan process.
It’s interesting because the narrative we usually hear is more like, those scumbags didn’t pay their mortgage.
And also because what Geithner says suggests that what hedge fund manager Whitney Tilson said a few months ago was spot on.
Tilson predicted that because of the massive number of foreclosures, banks would begin choosing to restructure mortgages rather than foreclose on houses. Foreclosing is the worst possible outcome for both the homeowner and the economy, said Tilson, so if banks are discouraged from foreclosing, the outcome will be positive for the economy.
In the excerpt from his interview with Black Enterprise below, Geithner says that the President is trying to get the housing market back on its feet. He follows up by saying that the government is trying to give Americans a chance to save their house.
The connection between those two points makes a lot of sense if you read Tilson’s explanation, which explains why it makes total sense for banks to be sympathetic and give people a chance to save their homes.
From Black Enterprise:
Geithner: …Until we get the economy to grow more rapidly and until we get the unemployment rate down more definitively, it is going to be hard to get the housing market back on its feet more quickly. The president is doing everything he can to try to do that. Now as we do that, we’re trying to make sure we reach as many Americans as we can and give them a chance to save their house. We can’t reach everybody.
Black Enterprise: So you’re trying to help those who were responsible and found themselves in a tough situation due to no fault of their own.
Geithner: Exactly. Not only that, you had people who were taken advantage of and we need to help them out. You have people who were completely innocent victims, who were responsible in how they borrowed, bought a modest home but who saw all their neighbours lose their homes, saw house prices in their neighborhoods fall very, very sharply. That hurt them a lot, too. That’s why it’s so important that we do what we can to get the economy growing again, get house prices start rising again and try to reach people who really deserve to be helped stay in their homes.