Rep. Barney Frank, chairman of the House Financial Services Committee, has issued a stern warning to banks that if they don’t volunteer to save more homeowners from foreclosure, Congress will make them. Amen to that! He said Congress will revive legislation that would let bankruptcy judges write down a person’s monthly mortgage payment if the number of loan modifications remain low. That bill should have never died in the Senate by a 45-51 vote, falling 15 votes short of the 60 needed to overcome procedural hurdles. Oh wait, how could I forget that some of these same banks are big donors to many senators, so they are not motivated to give a heck about the “little person’s” financial hardships. The Democrats have 60 senate votes, there is no reason why this bankruptcy write-down cannot be revisited, passed and sent to the President for his signature. The time for action is now, not later when the situation becomes more dire.
Frank also said his committee won’t consider legislation to help banks lend unless there is a “significant increase” in mortgage modifications. His statement comes on the heels of a deal struck yesterday between Treasury Secretary Timothy Geithner and more than two dozen mortgage companies. The two sides agreed to set the goal of adjusting 500,000 loans by Nov. 1.
Loan servicers have said that they are still playing catch-up with the deluge of customer requests by hiring and training thousands of new employees. Banks also are trying to sort through which customers face a legitimate financial hardship. Hello, that shouldn’t be so hard to figure out in this economic climate. The unemployment rate is skyrocketing in many states as we speak. I am no fan of Barney Frank, but he is right, something drastic needs to be done to stem this foreclosure tide that not seem to be ebbing one iota.
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