By inkstainedhack (From Maureen's Planet Finance)
California Rep. Jackie Speier (D) has a bill before the Congress to prohibit lenders from reporting mortgage modifications to credit bureaus, a subject we’ve written about here. See my other postings on this at http://www.ventoneconomy.wordpress.com/ to get to my Planet Finance site.
Like most senators and representatives, Speier has stopped taking emails from voters outside her district, something Planet Finance thinks is right up there with taxation without representation. Yeah there are a lot of people in this country and those outside your district can’t vote for you. But if you’re going to pass legislation that affects us, you have to open your ears to us. Don’t send us to our local guys and gals representing us, because they may not have any dealings with what you’re working on. And if they don’t, they’re not taking email on it from us.
So, I called Speier’s office and the young man, usually an intern this time of year, did listen and take notes. Here are the points I made. You may want to make a call yourself. 1-202-225-3531
- What is the purpose of a modification? It’s meant to keep people in their homes and paying real estate taxes, after the financial meltdown impaired their ability to earn the same income they had when they bought their homes.
- By ruining the credit they’ve struggled to maintain, you’re punishing them and others in the consumer chain.
- Currently homeowners who get modifications can’t trade down to more affordable homes, thereby lessening the effects on our staggering housing market, because their credit is now ruined for decades. Yeah, that’s a good idea. Let’s imprison these homeowners in debt hell.
- Finally, modifications don’t necessarily reduce the amount of debt owed; often payments are just moved to the back end of the loan. This is done all the time for friends of banks. In that case they’re not called modifications, they’re called Amend & Extend -- or Amend & Pretend – Agreements.
- One more - Penalizing the vast number of middle class consumers is wrecking havoc with the economy and holding back the recovery. Rick Sharga, RealtyTrac's SVP said it best (in my 5/3/10 Barron's piece at http://www.maureennevin.com/), "Since this cycle started in 2006, we've seen the credit histories of some five million homeowners effectively trashed, taking an entire tranche of potential next-home buyers off the market."