Continued surge of foreclosures draws flak and a renewed effort for greater empowerment of bankruptcy judges
A senate panel is hearing a flood of complaints targeting the relief efforts against the background of a continued surge in foreclosures. There is a renewed effort for greater empowerment of bankruptcy judges to alter terms of loans. Witnesses reporting to the sub committee of the Senate Judiciary made complaints and suggested introduction of mortgage cram-downs as the only way out of the impasse.
The Federal Reserve meanwhile has taken measures to making lending terms more realistic but recession continues together with unemployment. Another tidal wave of foreclosures predicted by pundits is causing consternation and worry. Sen. Sheldon Whitehouse a supporter of the bankruptcy bill said, “It is clear to me that Congress must do more to help struggling American homeowners. If we fail to act, I fear that we put ourselves at risk — that a vicious cycle of foreclosures, falling home values and declining tax revenues will keep us in recession for years to come.” Whitehouse who is chairing the Senate Judiciary sub-committee asked the Senate to take “another serious look” at the bankruptcy matter.
The financial lobby and a good number of Republicans of the Congress have been strongly against the measure. This led to it being blocked in the Senate last spring although the House had given the green signal. If permitted the bankruptcy judges would have had the power to bring down the loan amount in such a way that the borrowers would have been able to continue with the mortgage. It has been a key remedial measure suggested to tackle the housing crisis.
Meanwhile the Federal Government has come up with new rules for disclosure. It would focus on risky clauses of some mortgages and home equity loans as well as pre-payment fines. The new regulations would ban brokers and offices engaged in mortgage operation to be rewarded for navigating people to take dubitable high costing risky loans. Senator Ben Bernanke said, “Consumers need the proper tools to determine whether a particular mortgage loan is appropriate for their circumstances.”
The new regulations however would not be enforced until early 2010. The Fed has allowed a period of 120days for public debate on the suggestions. It is expected that a flood of responses will pour in and the Federal Government would have to sift through the same. This will take time – enough time for the lenders to sharpen their nails and find out ways to parry it.
- Tendency to Walk Away from Underwater Mortgages Facing Foreclosure has Increased
- Life Goes Flowing On Even After Foreclosure
- There is a Huge Shortage of Lawyers Trained in Foreclosure Complexities
- The Foreclosure Crisis Means a Bonanza for Some Enterprising Entrepreneurs
- The Restoration of the Jacksonville is Aided by the Prices of the Foreclosure Listings
- Foreclosure Climate has Caused Sharp Rise in Homeless Persons
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