News Hour Report on Housing Crisis
By Nicholas Ortiz, Boston Bankruptcy Attorney on Oct 16, 2007 in General Bankruptcy Information
Yale economist Robert Shiller and David Hale, chairman of a Chicago-based economic consulting firm, appeared on the News Hour with Jim Lehrer tonight to discuss the housing crisis and its possible effects on the U.S. economy. Interestingly, Mr. Hale noted that the $100 billion fund announced yesterday by Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. would benefit only Wall Street investors and not “Main Street.”
This perhaps is obvious as the fund would essentially act as a backstop for mortgage backed securities values held by institutional investors while not impacting the liability of individuals to make mortgage payments. Also interesting was a brief allusion by Mr. Shiller to modification of mortgage loans in bankruptcy. He said, “Well, I think that we have to remember the homeowner, the small person who is caught up in this mess. And so I think that something like a bailout for these people, to either adjust the terms of their bankruptcy or to encourage lending to them through FHA, or Fannie or Freddie, are called for.”
This appears to lend support to the bill recently introduced by Senator Dick Durbin (D-IL) that would allow individuals to make certain modifications to mortgage loans in bankruptcy.
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