While the removal of a bankruptcy provision was essential to the deal reached on the Senate's $15 billion housing bill, it has created problems on another front. After stripping the provision that would have let judges alter the terms of certain loans, Democrats now face criticism from consumer groups:
"The measure could have saved more than half a million borrowers from foreclosure through 2009, according to its supporters, by allowing judges to lower the interest rates of mortgages, extend the life of the loans, or forgive part of the debts," the Washington Post reports. "Of all the legislative proposals aimed at helping homeowners, consumer advocates said this one offered the most relief."
From today's Washington Post:
Without the provision, "there's no guarantee of any help whatsoever for many of the clients I work with," said Nancy Ryan, a bankruptcy lawyer in Fairfax.
Alys Cohen, a staff attorney at the National Consumer Law Center, said the package will do little to stem foreclosures. "What we've got right now is basically voluntary measures and incentives.... That's it."
Full article here.