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
