Help Families Save Their Homes! We Need Your Help Now!

We need your help!  The Senate is set to consider Senate Bill 61 titled “Help Families Save Their Homes” which will allow bankruptcy judges to modify mortgages in chapter 13 bankruptcy cases.  You can contact your senator and express your support for S.61 by following this link here.

As previously posted on this blog on several occasions and in other media outlets, this is important legislation.  Click here, here for prior posts on this blog; click here, here, and here for op-eds supporting this legislation.  If passed, S.61 will give bankruptcy judges the ability to modify mortgages in certain situations which will allow more people to stay in their homes!  As reported by the Center for Responsible Lending, over 46,000 foreclosure cases are filed per week as the foreclosure epidemic continues.  See here for a count in your state.

Foreclosures affect us all.  Apart from the human tragedy, foreclosures result in declining property values, declining tax revenues and health and safety issues because of vacant properties.  Eminent economists including the Chairman of the Federal Reserve Board agree that until the housing crisis is stabilized, the recession will continue.  S.61 will help stabilize the housing market by stemming the tide of foreclosures.

As for the voluntary loan modification programs, from my experience and those of my colleagues, they are not working as advertised.  Lenders consider modifications but rarely follow through with any meaningful modifications because the debtors lack real leverage.  In a business context, Chrysler reached a deal with its largest lenders to reduce its debt from $6.9 billion to $2 billion dollars, a 71% reduction in debt.  Why would Chrysler’s lenders do this?  Because of the threat of bankruptcy and the prospect of receiving even less than what was being proposed.  If consumer debtors do not have that comparable leverage, then the mortgage servicers have little incentive to voluntarily modify mortgages.

Finally, billions of dollars have been thrown at the lending industry to shore up their balance sheets.  Yet, if one piece of legislation is proposed to help ordinary folks stay in their home, they fight tooth and nail to stop it.  S.61 will provide meaningful help to people who need it and it will not cost any tax dollars.  That’s right, no tax dollars.

This legislation is needed now.  Urge your senators to support S.61 by emailing them now.