Foreclosure compromise bill: Money for counselors and city cleanup, but no bankruptcy relief
Senate leaders announced an agreement Wednesday on legislation to ease the slumping housing market and help millions of families threatened by foreclosure.
… The plan contains $4 billion in grants to local governments to buy and refurbish foreclosed homes, new authority for states to issue bonds to be used to refinance subprime mortgages and a $7,000 tax credit for people buying new homes or properties in foreclosure.
… The measure also contains a provision dropped from February’s stimulus measure that would permit homebuilders and other money-losing businesses to reclaim previously paid taxes, new disclosure requirements aimed at preventing unsophisticated borrowers from being duped by mortgage brokers, and additional money to provide counseling to people threatened with foreclosure and help them in negotiating with their lenders.
Republicans forced Democrats to drop… a controversial plan opposed by banks and their GOP allies to change bankruptcy laws to help borrowers trapped in subprime mortgages keep their homes.
So Countrywide, Wells Fargo, Citicorp and their fellow members of the Mortgage Bankers Association have successfully defended (for the moment) the unique, sacred bankruptcy immunity of their mortgage contracts on people’s actual homes… as opposed to loans for second homes, boats, farms, etc., which bankruptcy judges are free to defer or restructure.
Yes, children, the only important piece of Reid’s bill that the GOP actually vetoed — and Dodd gave up to achieve a compromise — is also the only proposal that would have stepped on the well-shod toes of the mortgage bankers who created this mess.
Money for more nonprofit counselors to sort out borrowers’ tangled situations and work out deals for with the banks? No problem. $4 billion to help cities to buy out, tear down and clean up tens of thousands of vacant, gutted foreclosed properties the banks have no further use for? Oh, okay. But let bankruptcy judges get a degree of jurisdiction over the principal and terms of the mortgage industry’s millions of predatory loans to lower-income borrowers ? Not on your life.
Well, Cleveland and Ohio certainly need the new foreclosure prevention funding and cleanup money, so I guess I’ll be happy to see Brown and Voinovich both vote for the Dodd-Shelby compromise. But here’s hoping Senator Durbin gets a floor vote on his bankruptcy bill as an amendment. I really want to see George Voinovich on the record on that one.
For expert local perspective on what Congress should be doing, check out these YouTubed presentations by Jim Rokakis, Ray Pianka and CSU Law professor Kathleen Engel.
They’re the first excerpts from City Council’s “Fighting Foreclosure and Abandonment Forum”.
April 2nd, 2008 at 9:16 pm
[...] April 3, 2008 by fivehusbands The most important blog post of the day - Bill Callahan on the flaw in the foreclosure compromise bill. The bill grants counseling for people in foreclosure, but fails to provide real relief to homeowners attempting to keep their homes in bankruptcy. Bankruptcy judges can restructure or defer payments on second homes, boats or farms but they cannot restructure or defer loans on the homes people actually live in. [...]
April 3rd, 2008 at 6:16 am
[...] Each day generates more debt. Late fees are astronomical; each month a bill is not paid adds to debt. This is why Bill Callahan’s post on the flaw in the foreclosure compromise bill is so important. If you are lucky enough to get a job after a prolonged period of unemployment the amount of debt can overwhelm what is most likely a lower salary. Bankruptcy offers the possibility for a fresh start. The importance of keeping your home in rebuilding a life cannot be overstated. But the Bankruptcy Court cannot offer you restructuring or deferment on your home mortgage. If you have a second home or a boat you could get that - but not for the home you need to live. [...]
May 1st, 2008 at 8:36 am
[...] Each day of unemployment generates more debt. Late fees on car payments, phone bills and the like are astronomical; each month a bill is not paid adds to debt. This is why Bill Callahan’s post on the flaw in the foreclosure compromise bill is so important. If you are lucky enough to get a job after a prolonged period of unemployment the amount of debt can overwhelm what is most likely a lower salary. Bankruptcy offers the possibility for a fresh start. The importance of keeping your home in rebuilding a life cannot be overstated. But the Bankruptcy Court cannot offer you restructuring or deferment on your home mortgage. If you have a second home or a boat you could get that - but not for the home you need to live. [...]