Two members of congress vowed to continue pushing for legislation allowing bankruptcy judges to alter mortgages for homeowners facing foreclosure even as lenders voiced strong opposition against the plan.
Sen. Richard Durbin and Rep. Brad Miller, the original proponents of the said legislation said that the battle against the increasing foreclosures would be their first priority come next year.
Speaking at a Capitol news conference, Miller reiterated his concern for the millions of middle-class families who stand to lose their homes to foreclosure. Eight million Americans, which represent around 16 percent of the total mortgages, will possibly face foreclosure in the next four years.
However, roadblocks from the White House and lenders themselves are not making the legislation’s passage easy. Last year, in an attempt to take more aggressive steps in solving the housing crisis, Miller and Dublin first introduced the legislation, but the mortgage banking industry protested the move. This year, the two lawmakers wanted to incorporate the proposal into the economic stimulus package approved by Congress last fall, but the White House and a few Republicans blocked the bid.
Lenders have no qualms continuing their opposition when the legislation is reintroduced next year; Mortgage Bankers Association spokesperson John Mechem said that they will continue the fight come January. According to Mechem, the process of “cramming down” the value of the house would do little to solve the foreclosure problem since this would just make lenders pass the extra expenses to other homebuyers by placing higher lending rates and fees.
Dublin and Miller are hopeful though that the change in administration would turn the tides in favor of the legislation. Durbin said that even if only about a third of distressed homeowners could be directly helped by the proposal, it would also push mortgage companies to adjust loan payments.
Mechem admitted that more action could be taken to solve the crisis, but he also said that mortgage companies are already doing their best to help homeowners facing foreclosure.
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