The foreclosure crisis has been devastating every area of the economy ; but changes to the bankruptcy law allowing homeowners to modify toxic mortgages is receiving stiff opposition from the mortgage industry and their powerful lobbyists But what they don't mention is why the mortgage industry would be opposed to measures that reduce the number of foreclosures--profits and power.
According to an article in the Star-Telegram:
The proposal, which could be voted on by Congress in a month or two, is already drawing fire from the mortgage industry. The move would force lenders to the negotiating table and could hurt the coffers of banks and investors holding mortgages.
Right now homeowners facing foreclosure literally need to beg mortgage servicers for help if they want to modify a toxic mortgage loan and stop foreclosure . There is no one forcing mortgage lenders to fix the problem that they created.
As a result of the fact that mortgage companies have no legal obligation to modify a loan, foreclosures are rising and the modifications that mortgage companies are "voluntarily" making eventually end up in foreclosure anyway because they are simply unaffordable for struggling homeowners.
With the proposed changes in the bankruptcy law, homeowners facing foreclosure would have more rights and mortgage companies would be forced to come to the negotiating table with terms that are fair, affordable and designed to prevent foreclosure.