Here is the link to the story to provide the source. I have also copied and pasted the article. I italicized certain areas and made my comments in bold text.
This post comes from Mark Huffman at partner blog ConsumerAffairs.com.
Congressional Democrats have wasted no time in advancing legislation to change bankruptcy rules with the aim of reducing home foreclosures. Under the proposal, judges could order lenders to forgive some mortgage debt. They say some mortgage debt. What if there is more than one lien and they relieve only one leaving the other still in turmoil for the homeowner? Second, who will they do this for? They say REDUCE, so some people will not be able to be helped.
The measure would change the law to give homeowners filing for bankruptcy the opportunity to restructure their loans so that they can save their homes from foreclosure. The bill would empower bankruptcy judges to modify mortgage terms to help homeowners stay in their homes. Consumer spending and living beyond your means is part of the reason why people are filing in the first place. You can modify all you want but if the home owner doesn't change their management of money it will continue to be an issue.
"The economic turmoil we are experiencing is a direct result of the burst housing bubble," said House Judiciary Committee Chairman John Conyers, D-Mich., who co-sponsored the bill in the House. People always blame the housing bubble. There is no bubble. One area of the country does not affect other areas. Second, Deregulation of Wall Street cause this entire mess. "Foreclosure is now expected to claim more than 8 million homes by 2012 -- 16% of all mortgages in America. Some of this 16% should have not gotten a loan in the first place. Others lost their job or through divorce. To set our economy on the path to recovery, we need to strengthen our communities by taking steps to stabilize the home mortgage market. Yes, I do agree with this, but this is not the only thing that needs to be done. If I need to explain what else needs to be done, we are doomed. Giving homeowners the chance to restructure their loans will help more families avoid foreclosure."
Lawmakers who introduced the Helping Families Save Their Homes in Bankruptcy Act of 2009 argue that the effect of the anticipated stimulus package will be greatly diminished unless foreclosures can be reduced. They say it would help break the continuing cycle of foreclosure that threatens neighborhoods and cities across the country.
"After spending $700 billion to keep the financial markets afloat, our bill will finally provide the help homeowners need and won't cost the taxpayers a dime," Conyers said.
Rep. Linda Sanchez, D-Calif., said that under the current bankruptcy law, judges can restructure debt on vacation homes, yachts and private jets, but not on primary homes. A lot of laws protect businesses. This makes sense in the fact that businesses create jobs for those who do not want to own their own business. However, homeowners do not have the same protection as noted. "I think that is fundamentally unfair," she said. "There is no reason why average Americans should not have the same legal protection to save their family homes." The wealthy write the rules. When you know the rules of the game, you can play. Nouveau Riche is teaching these rules.
Rep. Jerrold Nadler, D-N.Y., said that under current law, home mortgages are virtually the only debts that cannot be modified in bankruptcy. This is true. Even if you file bankruptcy, you still have to pay. The proposal, he said, would give homeowners the same advantages corporations have when trying to restructure their debt. Voluntary efforts to modify loans, he said, have not produced the desired results. As I have said before, modifying is ok, but it all depends on the consumer not to live beyond their means. Even if they have a lower monthly mortgage payment, they may continue to spend the extra money on things they cannot afford and they will stay inside the rat race.
Identical legislation was introduced in the Senate by Sen. Dick Durbin, D-Ill.
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It's amazing how they keep everything so vague! Where are the juicy details everyone wants?
We will see...
Tony
