Why Republicans Should Support Judicial Loan Modification
I am a Republican and a conservative, so it is a bit unusual for me to be asking you to support a piece of legislation introduced by the Democrats. I am specifically asking you to support House Resolution 200, the Helping Families Save Their Homes in Bankruptcy Act of 2009 ("H.R. 200").
Over the last year, I have watched as our government has flailed around from one failed measure to another in a vain attempt to save the economy. Big lenders such as Citibank have received hundreds of billions of dollars of taxpayer money under the theory that the bailout would free up the credit market, but I have yet to see any benefit to the consumers. It is time to stop bailing out Wall Street and pass legislation to help the "little guy".
As a member of the National Association of Consumer Bankruptcy Attorneys, I am in the trenches every day in an attempt to help my clients save their homes. The biggest obstacles that my clients encounter are adjustable rate mortgages and intransigent lenders who refuse to consider even the most reasonable loan modification requests.
H.R. 200 would give bankruptcy judges the authority to modify mortgages while still giving the note holders a reasonable return on their investments. The mortgage industry has already received help from the bailout money. The credit card industry received help when Congress passing the bankruptcy reforms in 2005. Isn’t it about time to help out the people who actually need it?
The lawful ability of a consumer to force a mortgage modification will provide the necessary impetus for many of the loan servicers to voluntarily modify the loans without the need for a bankruptcy filing. Without this legal leverage, there will be no bargaining power for the average consumer.
Credit Suisse estimates that passage of this legislation could reduce home foreclosures by as much as 20%. If you want to save the economy, then keeping people in their homes is a good way to start. This legislation would help homeowners get relief under the Bankruptcy Code and help people get back on their feet again.
The enactment of this law will not dramatically increase the number of new bankruptcy cases. The primary benefit of the law will be to give consumers who are already in bankruptcy the equal opportunity to modify their residential loans. The Congressional Budget Office in a study for Senator Durbin has estimated that the law will only result in approximately 2,000 new bankruptcy filings per year. It is time to help level the playing field and help your constituents in this time of need.
Thank you for your consideration.