Force banks to not foreclose? Let Judges decide what banks get in payments?

[audtatious]

WASHINGTON (AP) - A senior House Democrat threatened banks Wednesday that if they don't volunteer to save more homeowners from foreclosure, Congress will make them.

In a sternly worded statement, Rep. Barney Frank said Congress will revive legislation that would let bankruptcy judges write down a person's monthly mortgage payment if the number of loan modifications remain low.

Frank, chairman of the House Financial Services Committee, also said his committee won't consider legislation to help banks lend unless there is a "significant increase" in mortgage modifications.

Frank's statement was aimed at adding momentum to a deal struck Tuesday between Treasury Secretary Timothy Geithner and more than two dozen mortgage companies. The two sides agreed to set the goal of adjusting 500,000 loans by Nov. 1.

But it was far from clear whether that would happen.

Loan servicers say they are still trying to play catch up to a deluge of customer requests by hiring and training thousands of new employees. Banks also are trying to sort through which customers face a legitimate financial hardship.

Also, many loans have been bundled and sold to investors as securities, complicating efforts to modify the terms.

Congress tried earlier this spring to pass legislation that would give people a chance to keep their homes by filing for bankruptcy. But while President Barack Obama said he supported the measure, he did little to see it through and it was defeated amid an aggressive lobbying effort by banks.

The measure failed in the Senate by a 45-51 vote, falling 15 votes short of the 60 needed to overcome procedural hurdles.

"People in the servicing industry and in the broader financial industry must understand that if this last effort to produce significant modifications fails, the argument for reviving the bankruptcy option will be extremely strong, and I think there is a substantial chance that the outcome will be different," Frank said.

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How would this not cause issues and simply put more power in the hands of Gov?

[srellim234]

I saw an interesting idea that will never happen to solve some of the financial mess.

Simply put, make it mandatory that foreclosed properties be bulldozed to the ground. It will reduce existing inventory, allowing home prices to rise again. The banks would have a huge incentive to work with the homeowner since there would not be much profit gained by taking over a house that would then have to be destroyed.

Banks, who gave poor loans in the first place to people who couldn't afford them, would have to work with those same people to make proper loans this time or lose the inventory off their books.

I know there are a ton of arguments against such a proposal but there are some interesting aspects of it that could be expanded on to leave the responsibility where it belongs, with the mortgage companies and their customers, without either side totally taking advantage of the other and leaving the taxpayers out of it.

Another good one is the idea that "you give a loan, it's yours." No packaging or reselling of loans to other institutions. If BofA gives a loan for $250k at 6% interest for 30 years, that 6% is what BofA has to make their business run for the next 30 years. No "farming it out" at a discount to anyone else. If the homeowner defaults, BofA loses the $250k, not anyone else. Make them responsible for their own business decisions.

[themadscientist]

Frank has blood on his hands in the financial mess, he needs to shut his fat mouth, or go suck his lover off; anything but speak.

[WDRacing]

Frank has blood on his hands in the financial mess, he needs to shut his fat mouth, or go suck his lover off; anything but speak.