House debates foreclosure rescue
The House is expected to consider a $300 billion housing rescue package this week. The bill would allow the Federal Housing Administration to insure new, cheaper mortgages for homeowners facing foreclosure. Nancy Marshall Genzer reports.
A foreclosure sign (Joe Raedle/Getty Images)
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Scott Jagow: The House debates a $300 billion housing rescue package this week. The crux of it: The FHA could insure new, cheaper mortgages for people facing foreclosure. That is, if lenders go along with it. And therein lies the major hang-up with this bill. Nancy Marshall Genzer has more.
Nancy Marshall Genzer: The federal government would agree to insure risky loans only if lenders voluntarily trimmed the amount borrowers owed. Fat chance, says Alan Fishbein of the Consumer Federation of America.
Alan Fishbein: It does involve a major haircut on their part and they may prefer to wait.
The bill's sponsor, Massachusetts Democrat Barney Frank, says there is a way to force lenders into the barber's chair. He wants the bill to give bankruptcy judges the right to lower mortgages. Frank couldn't include that in his bill because that's Judiciary Committee's territory. He chairs the House Financial Services Committee. But his bill could be amended on the House floor. Otherwise, Frank says, lenders can thumb their noses at Congress.
Barney Frank: We're telling people, "We wish you would use this alternative process." Some of them will say, "Well, I can make more money foreclosing, so the hell with ya."
Lenders are lobbying furiously against any move to give judges the power to adjust mortgages.
In Washington, I'm Nancy Marshall Genzer for Marketplace.
