The Democrats want bankruptcy judges to have the power to force lenders to accept rewritten terms for primary mortgages. The goal: Fewer foreclosures. The obstacles: Congressional Republicans -- and their partner in the White House, Barack Obama.
Yet, while lawmakers have stepped in to provide enormous bailouts to the finance and auto industries, they’ve done almost nothing to tackle the foreclosure crisis that was the root of the turmoil. A $300 billion program enacted in July offered lenders government guarantees on troubled mortgages if the lenders agreed to absorb a 10 percent loss. Only a few hundred homeowners have benefited.As you will recall, when the catastrophe hit in October, Obama made clear that direct aid to homeowners was off the table. None of that HOLC stuff for him. Instead, he championed an emergency bill which helped all of the wrong people.
Housing advocates have long-pushed to empower bankruptcy judges to reduce, or “cram down,” the balance of primary mortgages, as well as other terms of the loans, to keep homeowners from suffering foreclosure. That legal avenue is currently available for loans on commercial property, yachts, vacation homes — almost anything but primary mortgages, which were singled out for exception under bankruptcy law.
A report released by Credit Suisse on Monday estimates that the change in bankruptcy law would reduce foreclosures by 20 percent.Even Nancy Pelosi is on board with this one. But not the Administration.
The Republican/Obama point of view is defended by one John Jackson, CEO of a company that makes lending software. You can't let bankruptcy judges rewrite loans, says Jackson, because “It removes the profitability of that loan for banks.”
Really? I'd have thought that the issue was moot. How profitable is it for banks to try to sell foreclosed homes in this market?
Have faith: Obama's been meeting with GOP leaders for ideas on how to "improve" the economy, as if the fellows who derailed the train had any further right to play engineer. At the Confluence, SM77 points out that Obi will heed GOP pleas to stop funding of Planned Parenthood for poor families. Instead, the cash will go to -- wait for it -- the “White House Council for Faith-Based and Neighborhood Partnerships.”
Yep, it's Dubya's "Faith-based initiatives" thang. Again. But this time, it'll have some real cash behind it. Your cash.
7 comments:
Bailing out the industry rather than the homeowner is stupid. There is no way that the economy is going to get fixed until things are fixed with the housing crisis. It is a critical issue. How critical? The house next door ended up a repo after the owners couldn't sell it for what they paid for it. Even after they dropped the price by 1/5 of the value, STILL no sale. They didn't have the money to take the hit on the difference so they had no choice but to let the bank have it back. It seriously de-valued the entire neighborhood's homes because it sold for a fraction of the value. That isn't just here in the NoVA area - that is everywhere. Until the govt recognizes the seriousness of the situation, things are not going to improve.
If bankruptcy judges can cram down mortgages, could not someone buy a house for market value, declare bankruptcy (intentionally, not because of circumstances) and get the principal marked down?
Will this not increase risk to the mortgage writer, leading them to curtail lending to minimally less credit-worthy individuals (not subprime), increase fees, increase interest rates, etc.?
Will the possibility of cramming down mortgages either in bankruptcy or outside of bankruptcy lead to some individuals currently paying and able to pay their mortgage, in anticipation of a principal write-down? Could it lead to a flood of these individuals defaulting and actually worsening the default situation?
They know bailing out the industry rather than the homeowner won't get it fixed....they don't want it fixed. If it's fixed, the bailouts loot stop.
The bailouts are not the means to fix the down turn.
They are simply loot.
So they have had the hundreds of billions variety of bailout. Soon they will need a bail out in the trillions to get the same thrill.
This is creepy stuff.
My solution is to eliminate ALL interest payments for the next two years to increase the flow of money from the consumer back to the banks!
AS consumer debt freefalls because consumers are actually paying off their debt, interest free, consumers not only pay down their debt, they also might have additional money to either SAVE, or make CASH purchases with.
Barack Obama's elitism is shining brightly.
Remember how the economists ridiculed Hillary Clinton's gas tax holiday? It turns out, these frickin elitist economists were WRONG.
The gas tax holiday would have helped back then, and would have glided nicely into the price of gasoline dropping.
grrrr.
Somebody needs to chronicle the load of MSNBC crap, all the stuff they said, that has turned out to be 100% WRONG.
Just the other day they still ridiculed McCain for wanting to take a break from debating to really figure out the bailout plan.
Maddow was on top of that one, ridiculing anybody who didn't instantly approve the bill when it was first announced. One month later and Maddow was acting like she had nothing to do with the results and acted like she had somehow been victimized!
Maddow's flip flop on the bailout plan was one of the most sociopathic moments I can recall, even topping Olbermann's rants.
http://www.DailyPUMA.com
Housing supply and demand are out of whack. There are several million housing units that will remain unoccupied, some of which will not be finished.
Until the overhang of unnecessary housing units is cleared from the market, and the median price of houses falls to be in line with affordability, there will be no answer to turning around the housing problem.
This is a major problem, no doubt, but the notion of preventing falls in the price of housing is exactly the wrong prescription. Prices must fall perhaps up to 50% down from their peak prices to attain affordability.
Unless and until one decides to nationalize all housing stock, the 'clearing' mechanism for this overhang of unaffordable inventory is to allow the market to work its way, with collapses in prices.
To prevent this will not solve anything, and simply prolong the problem, to no obvious benefit.
XI
Good call, Joseph!
President Obama will not bail out homeowners because then-Senator Clinton suggested it. So he refuses to think it is a good idea.
He is being foolish, as well as obstinate. Many of these people were suckered into variable rate mortgages, but cannot afford to refinance. It makes much more sense to help the homeowner work things out with the bank. Win-win situation.
djmm
“White House Council for Faith-Based and Neighborhood Partnerships.”
This is for groups like ACORN. Which, btw, is under investigation for fraud in over a dozen states. Obama wants to give them over 4 BILLION dollars for helping him steal the election.
Post a Comment