The House of Representatives passed the $819 billion stimulus bill on Wednesday, a monster bill that allots money towards major infrastructure, education, health care, & unemployment concerns. One concern it does not address, however, is stemming the tide of foreclosures. From the Colorado Independent:
“Congressional Democrats hoping to use the economic stimulus package to force lenders to refinance troubled mortgages have met an unlikely opponent: President Barack Obama.
Many Democrats, including Obama, have long-supported the strategy of empowering bankruptcy judges to alter the terms of primary mortgages to prevent foreclosures. But White House officials have said they don’t want the bankruptcy provision in the stimulus bill for fear of alienating Republicans, most of whom oppose the change…Housing advocates have long-pushed to empower bankruptcy judges to reduce, or “cram down,” the balance of primary mortgages, as well as other terms of the loans, to keep homeowners from suffering foreclosure. That legal avenue is currently available for loans on commercial property, yachts, vacation homes — almost anything but primary mortgages, which were singled out for exception under bankruptcy law.”
Although both President Obama and Speaker of the House Nancy Pelosi have made it known that bankruptcy reform is a priority, and that they will make sure to attach bankruptcy reform provisions to a bill that is a “sure-fire” pass, it is unclear how many homes will foreclose in the meantime — and how many more residents of Orange County will seek a bankruptcy attorney because of it.
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