The provisions for struggling homeowners in the Wall Street rescue bill signed into law Friday are largely voluntary and not enough to curb foreclosures, some analysts say.
The bill authorizes the government to buy $700 billion in mortgage-backed securities tied to poorly performing home loans. But it has a secondary aim: to keep people in their homes.
The legislation requires Treasury Secretary Henry Paulson to "implement a plan to mitigate foreclosures" and "identify opportunities to modify loans." It also requires the government to work with lenders "to encourage loan modifications."
That's not forceful enough, advocates say.
"The government buying these securities does not allow them to substantially expand loan modifications," said Paul Leonard, California director of the Center for Responsible Lending, a consumer advocacy group.
Leonard and others say the government won't be able to alter loans on its own because of the way the mortgage-backed securities it is buying are structured.
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