FORECLOSURE….Fromer Republican HUD secretary Jack Kemp takes to the pages of the LA Times today to tell us that federal bankruptcy law treats businesses better than people:
Bankruptcy law is wildly off-kilter in how it treats homeownership. Under current law, courts can lower unreasonably high interest rates on secured loans, reschedule secured loan payments to make them more affordable and adjust the secured portion of loans down to the fair market value of the underlying property — all secured loans, that is, except those secured by the debtor’s home. This gaping loophole threatens the most vulnerable with the loss of their most valuable assets — their homes — and leaves untouched their largest liabilities — their mortgages.
Can’t say I’m surprised by this, especially considering the Enron-esque ideology that’s been running the country for the past decade. As a fix, Kemp recommends quick passage of the bipartisan Emergency Home Ownership and Mortgage Equity Protection Act, which he estimates might help 600,000 homeowners avoid foreclosure and keep their houses. I don’t know if he’s recommending this on its own merits or because he’s lobbying for someone or other, but either way it sounds like a good idea. The sooner the better.