According to an article in the Star-Telegram, the bankruptcy legislation that would allow bankruptcy courts to modify toxic mortgages is facing fierce opposition by Senators attempting to protect mortgage industry interests.The article said:
Disagreement among Senate Democrats over how many struggling homeowners should qualify for court-ordered mortgage relief has stalled a key part of President Barack Obama’s foreclosure-prevention plan on Capitol Hill.
Mortgage lenders and their supporters on Capitol Hill are not finished shredding the bankruptcy bill that could potentially save millions of homeowners facing foreclosure . First they burdened homeowners with legislation that would require them to prove that they attempted to get a modification from mortgage lenders before filing bankruptcy and now they want to limit the number of people who can have access to modifications in bankruptcy.
Senator Evan Bayh, D-Ind. is preparing a rival bankruptcy bill that would limit bankruptcy modifications of subprime mortgages only. Senator Bayn claims that the House bill created by Senator Dick Durbin, D-Ill. would be too costly in terms of long-term lending. But the truth of the matter is that mortgage lenders have already burdened millions of Americans with costly loans and many of them are NOT considered subprime.
This bankruptcy legislation must not be reduced to another ineffective measure that fails to curb foreclosures and that’s what will happen if it is restricted too much. The American taxpayer has given the banking industry billions of dollars in aid and foreclosures are still rising. We need this bankruptcy legislation to undo this foreclosure mess created by the mortgage industry. Without this bankruptcy legislation we may be looking at a complete foreclosure catastrophe that will be costly to everyone involved including the mortgage lenders.