The nation’s housing market is in a deep recession, and further declines in new construction, sales and prices are imminent. By the end of next year, falling home values, combined with rising payments on adjustable mortgages, tighter lending conditions and, in all probability, a faltering job market, will have unleashed mass foreclosures — estimated at several hundred thousand to two million — unless something is done to help keep Americans in their homes.
The Bush administration has no relief plan that is up to the frightening scale of this problem. And no one in the administration seems to feel much urgency. Administration officials often lowball the number of imminent foreclosures and question the significance of statistics on the housing downturn.
In a speech last week extolling the economy’s strength, President Bush made just one reference to the battered housing market, calling it “challenged,” and asserted that we can “deal with it” and other economic uncertainties, “particularly if we keep the taxes low.”
Fortunately, some members of Congress do have a plan to help.
Senator Richard Durbin, Democrat of Illinois, recently introduced a bill that would allow bankruptcy courts to modify repayment terms on mortgages for primary homes. That could keep an estimated 600,000 troubled borrowers in their homes, paying off their mortgages, albeit over longer terms, at lower interest rates or on lower principal balances.
The bill also undoes a longstanding injustice. Under current law, mortgages on primary homes are the only type of secured debt that is ineligible for bankruptcy protection. Owners of vacation homes, farms and commercial property can modify those debts in bankruptcy court. But not your everyday homeowner. Under any circumstances, that double standard should not be allowed. With a foreclosure debacle unfolding, it must be rectified.
Read the full article at: The New York Times