House Committee hears call to deal with "foreclosure crisis."
<body><div id="article"><tr><td height="28" valign="middle" width="184"></td><td valign="middle" width="185"></td></tr><h1>House Committee hears call to deal with "foreclosure crisis."</h1><p>May 1, 2007 (EIRNS)--A House Judiciary subcommittee was told today that Congress must amend the bankruptcy laws to provide relief to those caught in the "foreclosure crisis" which the country is now facing.</p><p>Henry Sommer, president of the National Association of Consumer Bankruptcy Attorneys, laid out a series of measures to deal with what he called "the enormous foreclosure problems faced by literally millions of American families due to predatory lending, the bursting of the real- estate bubble, and the fallout from years of virtually unregulated subprime mortgages."</p><p>Sommer charged that the 2005 bankruptcy law amendments created "an expensive minefield of new requirements, tricks and traps" which made it much to difficult for debtors to obtain bankruptcy relief. (As if to reinforce Sommer's point, another witness, representing the Financial Services Roundtable, boasted that the number of bankruptcy filings had fallen by more than half over the past two years.)</p><p>But the most important change Sommer proposed is to the 1978 Bankruptcy Reform Act, in order to allow a bankruptcy court to write down the value of a mortgage to the current value of the property, as well as to modify its terms to include lower, fixed-rate interest rates.</p><p>As a result of the proliferation of "funny-money" mortgages, millions of homeowners are saddled with mortgages which exceed the resale value of their houses, especially as the housing market collapses. We must reduce these loans to the actual value of the property, Sommer told the committee.</p><p>Lyndon LaRouche has said that most mortgages must be "frozen," with the financial instruments derived from them, pending final workout, while borrowers remain in their homes.</p></div></body>