White house to go against the foreclose bill
February 27, 2008
The White House on the 26th of February said that it is going to veto a foreclosure bill that will reach there. The bill seeks to follow the recent economic stimulus package with many other proposals to get the struggling housing market to stand up on its own. The bill also seeks to reduce the number of foreclosures that are happening in the country.
The democrats in the senate had wanted to begin the debate on the issue as soon as possible but all action on the topic has been postponed to a later date in the week as the republicans are keen on keeping the subject of Iraq in the prime position.
The housing bill with which the Democrats came up with would change the bankruptcy laws that are there in the land and would provide the judges to decrease the interest rates and cut down on the money the borrowers owe the mortgage providers. It would also provide $4 billion to communities to buy and recuperate the already foreclosed houses. It also tries to make the sub prime mortgage loans more transparent to make sure that the borrowers would not be surprised by some big payment increases.
The White House however said that the amount of $4 billion is too high for the purpose of buying foreclosed homes. It also said that if the bill was passed it would serve as a bailout for the loan providers and the lenders were doing nothing to help the homeowners who are struggling to cling on to their homes. The White House also said that both the provisions that are mentioned in the bill would actually result in delaying of the recovery of the housing market.
Some of the other features that are there in the democratic bill are the provisions taken from the Senate’s version of the stimulus bill to encourage the mortgage revenue bonds. It will also add a decent amount of flexibility to help the homeowners get a refinance done on their sub prime loans. The measures would also allow the homebuilders as well as many other money losing businesses to reclaim those taxes which were paid previously.
This bankruptcy measure which the Democrats are trying to get approved is being vociferously opposed by many lenders and mortgage providers not to mention the long list of Republicans. They say that if such a bill got approved it would hurt the borrowers as it would then mean higher interest rates and increased down payments to reduce the risk of the homeowners trying to file for bankruptcy and get a court intervention.
The Democrats as a response to this claim of the Republicans and the money lenders said that they would tighten the bankruptcy provision that is mentioned in the bill so that only those borrowers of a sub prime loan would be able to get the benefits of the provisions. They also said that in order get the benefits the borrowers of the sub prime loans they will have to prove that they are not in a position to afford their current mortgage.