Senate Stem Foreclosure Tide
Filed under: Foreclosure
Soon legislation will come into effect allowing for refinancing of sub-prime loans and counseling for the victims of foreclosure. The pressure has been on the government ever since it reached out to help Bears Stearns from Bankruptcy, forcing it to no longer prevaricate on an impending bill that would help some house owners to battle foreclosures. The party leaders requested those on the Banking Committee belonging to both parties to draft a compromise legislation that would be presented before the Senate immediately.
Harry Reid the leader of the Senate majority (Democrat) said that the time has come to talk and not to argue any longer. He had made a joint appearance with the leader of the minority Mitch McConnel (Republican). This was such a rare instance that Reid had to add that it was not a April Fool’s joke! The shift in stand came after the law making body returned to work following a spring recess. During this period the federal government had interfered to save Bear Stearns. It was all part of the economy dominated scenario of the presidential election campaign trail.
However the clause about permitting bankruptcy judges to modify mortgages remains a contentious issue and most probably will not be included in the compromise formula. The Democrats however say that they will continue with their efforts to get it included overriding the Republican objections, the Bush administration and the lenders. Their argument is that by doing so it will raise the costs for all the borrowers in the long run.
The revised bill will most probably have a provision that will allow the state and local government housing agencies to issue tax exempted bonds. For this $10 billion has been sanctioned. Housing counselors will be provided with more funds to help foreclosure victims. Lenders will be expected to disclose accurate information about the borrowers.
It is hoped that this bill will be effective in stemming the rising tide of foreclosures. But this is only a temporary measure. What is the call of the hour is a more comprehensive set of regulations – reforming the entire mortgage system and addressing the woes of house owners who are sinking because the value of the house has become less than the loan amount.
Senator John Cornvn (Republican) is of the opinion that families need to be helped but this must not be bailout for speculators at the cost of the tax payers.
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April 7th, 2008 at 2:05 pm
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