According to an article in the Star-Telegram , the government plans use shame (instead of Bankruptcy) to encourage the mortgage industry to modify more toxic mortgages and prevent foreclosure.
The article said:
“By publishing the names of companies that are lagging behind in the government’s plan to ease the housing crisis, officials are counting on public outrage to get the industry on track. The Treasury Department on Tuesday plans to report on the progress of loan servicers – companies that collect mortgage payments – that are in line for up to $50 billion in subsidies.”
It is quite baffling that our elected officials have defeated legislation that would have given bankruptcy courts the power to modify toxic mortgages and by extension prevent foreclosure; are now eager to use “shame” instead and they actually believe that this going to stop foreclosure. I’m not saying that shame is a totally ineffective tool; but it is NOT as effective as passing concert, clear laws that force mortgage loans to come under the jurisdiction of our courts during bankruptcy.
Many of these mortgage lenders have no shame; this is why we have found ourselves in the throes of this foreclosure crisis. It is time to get tough with mortgage lenders who are often shirking their responsibility in the foreclosure crisis that had a major hand in creating. Verbal agreements and shame campaigns are not enough to maintain the proverbial roof over America’s head. Our legislators have a responsibility to homeowners and all Americans to prevent foreclosures from destroying the security of America’s families and communities. The time to act is now.