A Bailout for Everyone...But the Little Guy

$1,000,000,000,000 for the Toxic Asset Recovery Program. $25,000,000,000 for automakers. AIG gets $150,000,000. How much are you getting?...$0. So the bail-outs for the Big Guys go on & on & on. Everybody has their hand out. Big Business and Big Banking is getting money thrown at them at a record pace. All of this while unemployment goes up. Foreclosures are up. House prices fall. For the second consecutive Quarter in Houston, Texas, home sales and prices have fallen. Credit gets tighter. Is there going to be any help for the regular person trying to pay mortgages, school loans, credit card debts, car loans, and high utility bills? I don’t think so.
So, what is a regular person to do?
Hopefully, some help is on the way. Congress has actually attempted to address some of these problems through changes in the Bankruptcy Code. From the beginning of the current law in 1978, residential mortgage debt has retained a special protection that no other creditor was afforded. GMAC, Ford MCC and others were subject to having their debt modified in a bankruptcy proceeding (interest rates adjusted, principal lowered to the actual value of the collateral, terms of loans extended). Residential mortgages were exempt. The House has passed a law to change the Bankruptcy Code to allow these same modifications to mortgages by a Bankruptcy Court. This would be mandatory and allow consumers, not just those meeting restrictive guidelines in the current voluntary plans, to change the terms of their mortgages. Adjustable mortgage rates would be lowered and fixed; “Underwater” mortgages would be reduced to actual house value; terms could be extended when necessary.

This bankruptcy modification bill is moving slowly through the Senate. It is meeting great resistance from mortgage companies, but may be brought to a vote by Memorial Day.[i]

Call your Senator and let them know you support these changes to the Bankruptcy Code. Fairness is all we ask.

[1]See this article in the Washington Post. http://www.washingt%20onpost.com/%20wp-dyn/content/%20article/2009/%2004/20/AR20090420%2003230_pf.%20html



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