How John Edwards will tax us to pay for the foolish borrowers:
# Rewrite Certain Abusive Mortgages in Bankruptcy to Let Families Keep Their Homes: Many victims of predatory lending owe more on their mortgages than their homes are worth. These "underwater" mortgages are created by excessive interest charges or falling home values. Even if they declare bankruptcy, they must pay off their inflated mortgages in full or else lose their homes. As president, Edwards will let homeowners shed excessive mortgage debt in bankruptcy. They will be able to keep their homes by paying off their full market values and get new loans terms set by the courts. For example, a family owing $120,000 on a home worth $100,000 could cut its mortgage to $100,000, with the remaining $20,000 treated like other unsecured debt in bankruptcy. The relief would be available only once and at the discretion of the bankruptcy judge.
# Rescue Homeowners at Risk of Foreclosure: Many foreclosures can be avoided by timely help, such as renegotiating loan terms, finding a new lender, or catching up with past payments. Preventing foreclosures can also prevent vicious cycles that can bring down whole neighborhoods. Edwards proposed a national Home Rescue Fund to help prevent foreclosure. The Fund would work through local non-profits, government agencies, and community financial institutions. If necessary, the Federal Housing Administration, Fannie Mae, and Freddie Mac could work with community lenders to create affordable refinancing alternatives for these families.
# Hold Lenders and Investors Accountable: Edwards commends the FDIC for summoning lenders and Wall Street investors to a meeting discussing their role in the crisis. However, these conversations will only succeed if lenders and Wall Street give regulators specific commitments to mitigate foreclosures, such as waiving prepayment penalties, restructuring loan terms, and forgiving of back payments. [Engel and McCoy, 2007; National Consumer Law Center, 2007]
______________________________________________________
1) So the banks would eat the $20K in bankruptcy. You know what that means - higher rates and less available cash for the virtuous who acted cautiously and didn't buy into the bubble.
2) Who would determine the "market value" before the bankruptcy courts?? Not the same appraisers who overstated values in order to get loans approved. Would those in BK pay these appraisers to low ball the value so they get more debt forgiven??? Who would pay that $200 appraiser's fee anyway. The banks - more borrowing costs later; the borrowers who can't pay their mortgages; or the government - you and me. Do you think that maybe the counties would pay it, and have them high ball it in order to keep the tax base up???
3) Home Rescue Fund???? Oh please. Taxes, taxes, taxes.
4) Prepayment penalties, restructure terms, waive back payments???? Higher rates and less capital available for anyone going to a bank later.
There is a free lunch out there for all. Vote for John Edwards:
johnedwards.com |
