- Look for bankruptcy and home foreclosure... (0.00 / 0) to be a big issue in Congress in the next few months. Donna Edwards is right that a bankruptcy court can modify mortgages on investment properties and vacation properties, but not on your home. That's a huge problem in helping the 2.2 million families who will lose their homes to foreclosure in the next couple of years unless something changes, and to everyone in their neighborhood, who will see the values of their homes collapse. And yes, those folks are dramatically more likely to be African-American or Latino than white.
The problem is not the 2005 bankruptcy bill, but a 1978 provision. That provision made some sense when virtually all home morgages were thirty year, fixed-rate mortgages with a low loan-to-value ration, but it makes no sense now with the variety of "exotic" subprime loans.
There is legislation in the works to fix the problem, but getting it through is no slam dunk.
legislation (0.00 / 0)Thanks for the comment. What existing legislation should we get behind to fix this?
[ Parent ]Legislation doesn't exist yet, (0.00 / 0)but it will shortly. There are some disagreements within the family about exactly how far the legislation should try to go, but a general agreement that the prohibition on a bankruptcy court modifying a home mortgage needs to change. Some other provisions of the 2005 law also a problem, like the requirement of credit counseling before filing bankruptcy. In most circumstances, that's just a paternalistic insult to the debtors, who are more likely to have gotten into dire financial circumstances because of a serious family illness than because they were simply profligate. If you need to declare bankruptcy because your house is being sold at an auction at the courthouse next Tuesday at Noon, however, it can be a bigger problem.[ Parent ]Some consumer advocates have a more ambitious agenda of bankruptcy law changes. I'm one of those compromisers that you rail about here, but the current opposition of the banking industry to any change in the bankruptcy law makes compromise difficult.
I'll try to keep you posted. A little blogospheric support would help once the battle is joined.
All the specifics he suggests would be Good Things.
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