A Foreclosure Every 13 Seconds
March 5th, 2009 by KarinaThe Wall Street Journal reports there is a foreclosure every 13 seconds in America. Today, the House will complete consideration of the Helping Families Save their Homes Act (HR 1106), which begins to put part of President Obama’s Homeowner Affordability and Stability Plan into law. The Obama plan will help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure—as well as their neighbors whose own house values will drop as a result of nearby foreclosures. The bill includes key incentives to encourage lenders to negotiate affordable mortgages for homeowners who are underwater, at risk of foreclosure, and those nearing bankruptcy and fixes the Hope for Homeowners program designed to spur the refinancing of mortgages, by reducing current fees that have discouraged lenders from voluntarily participating and by offering new incentives for lenders to negotiate loans. It gives lenders the confidence to modify loans by protecting them from some lawsuits. The bill also allows bankruptcy judges to modify the terms of loans for families with existing mortgages, just as investors in vacation homes, real estate speculators, and corporations have been able to do for years. As a USA Today editorial explains, “adding the hammer of the bankruptcy court would create an incentive for more lenders to do that [restructure loans] more urgently – and would provide a reasonable last chance for qualified homeowners when lenders don’t act.”
Rep. Zoe Lofgren on the new Manager’s Amendment:
Rep. Lofgren: “Bankruptcy is no picnic. For an extended period of time all of the debtors’ personal financial life is in public. You can’t spend anything without permission of the court. You can’t give to your church unless bankruptcy says ok. Santa can’t come to your house unless the court permits expenditure for a toy. It is a permanent mark on your record. And so to think that someone would go into that proceeding frivolously with that kind of stain, that burden and that kind of stigma is just not realistic.” |
Rep. Brad Miller:
Rep. Miller: “Home mortgages is the only kind of debt that can’t be modified and it’s not because that was brought down on stone tablets from Mount Sinai. It’s just a special interest give which we see around here all the time. In 1978 the mortgage industry got that exception as a special interest provision. We have heard that this will result in arbitrary modifications. No, there are more than a million bankruptcy cases a year. We have a pretty good idea what bankruptcy judges are going to do - they are going to do the same thing with this kind of interest they do with every other, including family farms.” |
Rep. Al Green:
Rep. Green: “The words that come to mind as we debate this issue would be ‘at last.’ At last we are now embracing help for homeowners. We have worked for wall street. We have worked to do something for main street. It is now time to something for home street. The street where people live, the street where people have their greatest investment.” |
Rep. Alcee Hastings:
Rep. Hastings: “Bankruptcy will remain as it always has been, a last resort, and modifications will be at the individual discretion of a bankruptcy judge who will determine if a borrower has acted responsibly and if a claim has any merit. Most importantly, allowing judicial modifications will maximize, not lessen, the value of troubled mortgage — mortgages for lenders and will avoid the continuous decline in property values in neighborhoods with foreclosed properties.” |
Rep. Earl Blumenauer:
Rep. Blumenauer: “I hear people talking about cramdown provisions. It’s exactly the same provision that Donald Trump is going to have the next time he goes bankrupt on his fourth vacation home…the investor, the speculator, can have the cramdown, he can have the terms modified, the interest rate reduced, the balance reduced, but the poor person who is just living in it is stuck…that’s not equitable.” |