NEWS FLASH – There could be a foreclosure crisis
By Chip Parker, Jacksonville Consumer Attorney on Jan 29, 2008 in Mortgage Reform
January 28, 2008 – The Florida Times-Union reported today that the subprime mortgage collapse “could be turning into a foreclosure crisis.” I checked the date on my paper to be sure that I had not travelled back in time during my sleep because that bit of prognostication would have been more impressive a year ago.
The attorneys of Mortgage Law Network and Bankruptcy Law Network have been begging Congress for almost a year to help homeowners caught up in the subprime mess. Despite our rapidly expanding readership, the right people aren’t reading!
No offense, dear reader, but the right people aren’t reading ANYTHING! We are not the only source that’s been screaming for months to DO SOMETHING! Congress and the President do little more than pay lip service to the greatest crisis facing America since 9/11 (and before that . . . The Great Depression).
Am I exaggerating? Mark Zandi, chief economist at Moody’s Economy.com, recently stated that without any intervention, an estimated 3.5 million homeowners could default on their mortgages in the next 2 1/2 years. Zandi also stated, “The floor has fallen out of the housing market. . . This is the worst housing decline since the Great Depression.” He was just echoing the sentiment of the CEO of Wells Fargo, John Stumpf, who stated last November, “We have not seen a nationwide decline in housing like this since the Great Depression.”
Recently, Agence France-Presse (AFP) reported that eight remote Norwegian towns (none of which inhabit more than 25,000 people) were on the verge of economic collapse for investing in Citigroup, Inc. On its face, that story means little, but it demonstrates how far the economic devastation is spreading.
As is always the case, more attention is paid to the dying mortgage servicing industry, like Countrywide, than the dying homeownership.
Congress could help the industry, and more importantly, homeowners, by passing the pending bankruptcy reform legislation that spreads the burden between the subprime lenders and borrowers without sucking money from taxpayers. The proposed Senate Bill 2136 would force lenders to accept lower interest rates, stretched-out payments or even decrease the payoff balance due on the loan.
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