This house bill introduced by Rep. Brad Miller (D-NC), a member of the House Financial Services Committee and Rep. Linda Sánchez (D-CA), Judiciary Subcommittee Chairwoman on Commercial and Administrative Law have introduced legislation that will prevent hundreds of thousands of Americans from losing their homes by allowing them access to bankruptcy relief.
H.R. 3609, the Emergency Home Ownership and Mortgage Equity Protection Act of 2007. H.R. 3609 would allow judges under Chapter 13 bankruptcy proceedings to unilaterally mark down the value of a primary mortgage from its full amount down to the fair market value of the home. The bill would also give judges free reign to change the other terms of the loan, including the interest rate or the length of the loan.
So what does this mean to the millions of Mr. and Mrs. Babyboomers with lots of equity in their homes, great credit history, possibly looking at retiring and pulling out some equity to purchase a well deserved quality of life in their upcoming retirement? Well read on!!
David G. Kittle, CMB, Chairman-elect of the Mortgage Bankers Association testified this week before the House Judiciary Committee's Subcommittee on Commercial and Administrative Law. In his testimony, Kittle told the committee that proposed legislation to reform the bankruptcy code and allow judges to "cramdown" debt on primary residential mortgages will impose significant costs on consumers by restricting the flow of capital into the mortgage market and increasing the price tag on all mortgages.
"If you chip away at the security created on home mortgages-and this bill is not a small chip, it is a sledgehammer attack-you chip away at the entire core of the mortgage finance system," said Kittle. "In order to account for the added risk you will add significant costs to obtaining a mortgage. If this bill becomes law, we believe mortgage rates would jump significantly, going up 1½ to 2 points for everyone taking out a loan."
Mr. Miller is encouraging his constituents to reach out and support the passing of this bill. He goes on to say, "in fact, if Congress fails to take action to help reduce foreclosures, American families not facing foreclosure will lose up to $265 billion in wealth." I am not sure who or where he got these numbers from but if you ask me, if passed it will prohibit all the hard working Americans the ability to make more wealth. We are all adults here and at some point we have to take responsibility for our actions.
I feel for these people who are facing foreclosure. However what about the millions of prudent and patient Americans who actually put money down on their home, have paid interest for years and years at rates higher than the adjustable rates that are cause for all of these foreclosures. These hard working Americans did not create this problem and should not take the brunt of fixing it.
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