Will the Federal Reserve's Interest Rate Cut Help Stop Foreclosures

[Moe Bedard]

Ben Bernake, the Federal Reserve Chariman cut 50 basis points (one-half a percentage point) off of its discount rate — the rate it charges banks to borrow federal funds — from 6.25 percent down to 5.75 percent. The Fed has also pumped billions of dollars into the nation’s economy in the past week and is trying to do too little too late.

I don't think a rate cut will do any good if there are no refinance options for homeowners stuck in these subprime ARM's. The lending guidelines are so tough and couple that with declining housing values, only make things tougher for homeowners.

Sure a rate cut will help pump some money into our markets but it will not help the impending explosion that has yet hit our economy as a result of record breaking foreclosures in every state of the nation.

The Fed can cut rates down to 1% and what good is that going to do for the thousands of homeowners that can't qualify for a loan? Nothing! Loan modifications are the only way to help stop foreclosure in our communities and until congress and the Fed get's that, we will be in for a wild ride.