Our economy, still reeling from the housing crisis, now has to confront a new and devastating development — a large number of questionable housing mortgage foreclosures.
“Since the bubble burst, efforts to rework bad loans have been slowed by the lenders’ resistance, and by their incompetence," according to an Oct. 3 New York Times editorial.
“Foreclosures, the end of the mortgage pipeline, have also been handled with a disregard for rules and standards," the report continued.
Wouldn’t it make sense to consider creating a new division in the bankruptcy courts to deal with “the prospect that some families may have lost their homes in a less than legal process and that some buyers of foreclosed houses may not have clear title to their properties?”
Congress should give bankruptcy court judges the power to remake the terms of mortgages, a reform which the Congress refused to enact the last time it examined bankruptcy proceedings.
At that time, Congress yielded to the demands of the banking and housing industries. Apparently, it is those two industries that once again threaten our economy.
When Congress wants to act, as it has demonstrated with the passage of the Troubled Asset Relief Program (TARP), the stimulus package, and bailouts of the automotive industry, it can do so with alacrity.
Now is the time for Congress to step in, this time on the side of the consuming public. That doesn’t happen often enough.
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