Thanks MBG, for letting me blog here! Not to mention for being a stellar intern at Americans for Fairness in Lending (where I work).Today the Senate Democrats are in the midst of handing another win to the lending industry. While debating The Foreclosure Prevention Act of 2008, they took out crucial Title IV, which would give judges permission to modify subprime mortgages for homeowners in bankruptcy. This kind of protection already exists for your yachts or your second homes (um, since you totally have a yacht) but it doesn't exist for primary residences. Go figure. Consumer advocates were supporting Title IV because it would work -- it would save 600,000 homes if enacted. And saving them this way wouldn't cost the U.S. Treasury a penny.
But. The Senate dropped the provision. I hear the excuses -- politics is a give and take and the Dems wanted to get some of their other reforms through, so they dropped Title IV. But a bill that's supposed to address the foreclosure crisis is a joke if it doesn't allow homeowners to modify their mortgages in bankruptcy.
Republicans are masters at making Dems look stupid for exactly these kinds of compromises. The Dems should at least make sure there is some public accounting for who votes for and against bankruptcy reform. Republicans (or anyone else who ends up voting against it) should have to go home, face their constituents in foreclosure, and explain why victims of predatory lending don't get this bit of relief when they throw in the towel and file for bankruptcy. And there's still hope that there will be an amendment to the bill containing bankruptcy reform
-- so stay tuned.
The lending industry has its claws into Congress pretty deep. They donate more to politicians than the oil industry does. And most Americans still internalize the stigma that goes along with being in debt or bankrupt. They don't realize that "we are the 90%"--so they don't realize that things could be different. It'll just take a little courage from our representatives.
By Sarah Byrnes
1 comment:
Well put.The banking and mortgage lobbyists have successfully convinced[bribed?]the US Senate that any change in the bankruptcy law that would allow homeowners to save their homes by permitting a judge to reduce the interest rate would adversely affect the mortgage market by reducing the availability of mortgages and increasing interest rates therefore negatively affecting the poor consumer that they care about so much.This theory was recently disproven in a recent study but unfortunately I am not in my office so I dont have the authors'names.It is always the same scare/lie tactic and our legislators always buy it[or are they bought by it?].One of the arguments used to support the anti-consumer,Bankruptcy reform act of 2005 which was actually called BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005,a misnomer to put it mildly,was that the bad apples,you know all those evil people who file for bankruptcy just to survive were the cause of higher interest rates and that was costing every family in America $600 a year.If you pass this law we will all see a drop in credit card interest rates.Has anybody seen a drop in thei rates?Did you get your $600 check in the mail.My son with an excellent credit score just received a shiny new Bank of America credit card at a reduced interest rate of 35%.Senate bill 256 would have allowed thousands and thousands of people to save their homes from these dishonest lenders who lured these people into these loans.The bill is a solution to the problem and will not cost the taxpayer a dime as oppsed to all of the other solutions which are essentially bailouts of the monied interestsincluding this bill which actually gives money to builders.All bailouts cost the taxpayers money.This bill correctly puts the onus on the industry that created this problem and they should pay for it.these lenders loane money to people knowing quite well when the loan adjusted the homeowner would not be able to afford the loan and would lose their home.Integrity and honesty was not part of their training.What a crime that we vote for Senators who dont have the backbone to vote for their constituents.It is time for a change.Let your elected leaders know. i am a consumer bankruptcy attorney in NJ who has been proudly representing homeowners for the past 34 years
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