Senator Schumer is quoted in Politico as rejecting a proposed compromise to S. 61 that would limit its scope to sub prime mortgages. Bravo!
The apparent strategy of the bankers is to try to amend the mortgage modification bill into irrelevancy. Schumer points out that such a limitation would dramatically reduce the positive effect of the bill on declining housing markets.
The clients I’m seeing in the past couple of weeks are looking at declines in housing values of several hundred thousand dollars each. While there might have been a logic to trying to keep a house with a toxic mortgage when the house’s value equaled the debt, I can’t advise that it makes sense on current values.
Without the option of judicial modification, the lenders have no incentive to offer meaningful modifications. It was telling that the week HR 1106 was up for a vote, I had three opposing attorneys raise the subject of their clients’ openness to modifying the mortgage principal. First time in the course of this crisis that lenders expressed any real interest in keeping my clients in the house and paying on a modified mortgage.
Let’s hope that Schumer’s colleagues in the Senate hear from constituents other than bankers on this issue. Email your Senators at www.nacba.org/TellCongress.