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Thursday, November 27, 2008
We set aside this Thanksgiving holiday to commemorate a time when, in the midst of great hardship, we came together as a community to feast with our neighbors and to take time out to just be grateful. We find ourselves again in a time of great hardship, although certainly few of us have experienced the illness, cold, and hunger that were the norm in centuries past. Nevertheless, many of our neighbors are sick or cold or hungry each day. We should not forget them as we sit down to whatever feasting we enjoy.
Even in such difficult times, there is always something to be grateful for. I am blessed with a healthy family, and two wonderful daughters who are both doing pretty well for teenagers. Generally, there is enough food to eat — good, healthy food in astonishing varieties. What would the pilgrims have thought about bananas or pineapples? And virtually every American has access to clean, fresh water in abundance, delivered right to their house. Half the world does not have easy access to fresh drinking water, yet we merely have to turn a tap, and it pours forth.
The months and years ahead will likely be filled with many opportunities to worry, to work, to protest, to complain. Today, for Thanksgiving, may you find a moment to pause and remember to be grateful for what we have.
POSTED BY Resolve Legal AT 12:44 pm Comments (3)
Sunday, November 23, 2008
The government announced this evening that it is going to provide more money to Citibank, at least $20 billion for starters, and up to $300 billion in “guarantees” for bad loans. The Treasury Department is still unwilling to allow any of the bailout money to be used to help homeowners who are struggling to pay their mortgages. And we have been finding that the mortgage companies and banks are almost impossible to reach on the phone, so even if they are willing to try to help, you probably can’t get through to them to find out.
We are hopeful that President-elect Obama’s announcements tomorrow about his plan for economic stimulus will have some impact, but frankly, we are not too optimistic. So much of the economy has been based on overspending — credit card debt, home equity, store credit — there is going to be some painful adjustment no matter what programs the new administration brings to the table. And unfortunately, we still have to wait two more months to implement those plans.
I have noticed that the previews of tomorrow’s big speech have not included much mention of what will be proposed for housing. We continue to hope that bankruptcy reform will ultimately be enacted. Currently, virtually all types of loans can be modified in a bankruptcy except residential real estate loans for primary residences. We could help so many more people if the law protected homeowners as well as it protects Lehman Brothers and Circuit City.
I don’t even know what to say about the car companies, except that I wish Resolve Legal had a private jet that I could fly around in. Showing up at Congress to ask for bailout money in a private jet is about the same as showing up for bankruptcy court in one. I don’t recommend it.
POSTED BY Resolve Legal AT 10:24 pm Comments (0)
Thursday, November 13, 2008
While we were all looking the other way, enjoying our moment of a victorious election, your U.S. Treasury Department has been cooking up more schemes to spend your tax dollars on bailing out banks. Today’s New York Times top story, misleadingly titled “U.S. Shifts Focus in Credit Bailout to the Consumer,” reveals Paulson’s strategy to continue funneling money into banks, and refusing to provide any relief for homeowners. He categorically rejects any use of the TARP funds for mortgage relief, and apparently has cut off talks with Sheila Bair, head of the FDIC, to provide homeowners with some real options.
But that’s not all. Now, Paulson says, in addition to propping up mortgage lenders, we are going to need to prop up credit card issuers. Paulson’s brilliant plan to help consumers is to “invest about $50 billion from the bailout fund into the new loan facility, with the aim of helping companies that issue credit cards, make student loans and finance car purchases.” In other words, your government intends to create additional capacity for credit cards companies to increase the “liquidity” they have available to extend more credit to us consumers. And then to guarantee the debt to the banks using our tax dollars.
Haven’t they been paying any attention? Is there anyone who still believes, honestly, that spending more money is the best way to get us through this economic downturn? On credit cards? Really? What are they putting in the water over there? This is the Secretary of the Treasury proposing this! It really would be funny if it weren’t so thoroughly despicable.
The only people who stand to gain from this proposal are the very bankers and Wall Street investors who created this whole mess. It seems as if the Bush administration is intent on pumping as many dollars into the coffers of their buddies before they leave office as they can possibly manage, leaving all of us to pay the consequences. This is truly an absurd idea, that we should make additional credit card dollars available, but we should absolutely refuse to provide any relief for people who are behind on their mortgage payments. I wish I could tell you how many of the people I meet with are having to decide whether to pay a credit card or pay their mortgage each and every month — more credit card debt is not the answer.
At least credit card debt is generally something I can help with in a bankruptcy case!
POSTED BY Resolve Legal AT 10:03 pm Comments (0)
Wednesday, November 5, 2008
It was a momentous election, and I am frankly jubilant at the result. But while our joy is without reservation, our hope that the election will bring true transformation of the disparaties between the have’s and have-not’s is tempered. Too often, we have seen political realities vanquish idealistic visions, and so we are not unduly optimistic that Barack Obama will be able to rescue us from the terrible mess we are in.
The election was long and hard, but the hardest work is clearly ahead. Our economy has been virtually destroyed by the unregulated growth of toxic mortgages and their subsequent demise. We hope that our new administration will act quickly and decisively to improve the environment for borrowers, and thereby strengthen this faltering economy for all of us.
At the recent annual Consumer Rights Litigation Conference, the following suggestions for change were offered.
*Create mandatory federal standards for loan products secured by a primary residence.
*Standardize loan products, and enact regulations to ensure that most loan are 30-year fixed mortgages, except in special circumstances.
*Re-enact usery laws, with a floating rate tied to some appropriate measure.
*Provide incentives to encourage best pricing and affordability of home mortgages, including underwriting based only on the payment stream of the loan.
*Require that loans be affordable, i.e., 38 percent or less of the home owner’s household income.
*Enact legislation ensuring full assignee liability for all purchasers of home mortgages.
*Amend the tax code to provide less incentive to add mortgage debt to primary homes.
*Clarify the duty owed by servicers to the borrower, and improve RESPA.
*Prohibit foreclosures without first offering a loan modification.
*Prohibit loans with a loan to value ratio greater than 90 percent.
*Amend the bankruptcy code to permit modification of home mortgages, even over the objections of the lender but subject to the oversight of the court.
Quite a wish list, I realize. But without significant and courageous action, our mortgage troubles are only beginning. Let’s hope our new government can do better.
POSTED BY Resolve Legal AT 10:30 pm Comments (0)
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