JimfromPennsylvania

McCain and the Republicans better change their course and show they are trying to help as much as they can on the subprime issue or it is going to cost them precious votes in November. McCain’s image on the issue, expressed by his own words, that the U.S. Government can’t be bailing out businesses and homeowners that make irresponsible decisions will not cut it (although technically he is right). The American people don’t want to see in the ballpark of two million fellow Americans lose their home in the course of a year over this issue; moreover, this rate of foreclosure is sending a Tsunami through the nation’s economy - the American people want a solution to this subprime problem so that it stops hurting the whole American economy.

To reduce the homeowner foreclosure rate, Republicans and McCain should come out and support the legislation that will allow Bankruptcy Judges to reduce the interest rate and offer relief for missed payment for “subprime” mortgages (this is the key for “Subprime” mortgages only and only for loans for a burrower’s primary residence) in a reasonable manner. This will give valuable leverage to subprime burrowers that can’t afford their present or future monthly loan payments to re-negotiate with their lender reasonable new terms for their mortgage loan and thus avoid defaulting on the loan and losing their home in foreclosure. The bankruptcy judges will not be given cart blanche power, the power to do whatever they want; the bankruptcy judges will not be able to reduce the principle owed to the lender, the bankruptcy judge will only be able to reduce the interest rate on the loan and their will be limits on that – the limits should be like the bankruptcy judge can reduce (for the life of the loan) the interest rate to as low as 110% of the current average rate on a 30 year fixed rate mortgage in the U.S. and the bankruptcy judge can relieve the burrower of the obligation of making up missed loan payments (however, those missed payments will be added to the principal owed the lender). In essence, the bankruptcy judge will not be able to save homeowners from foreclosure who can’t afford their home even with fair and ordinary loan terms it is only those homeowners who reasonable Americans would hope and in fact expect the system to save that will be saved.

Some Republicans will say the government should not do this bankruptcy initiative because the government will be ruining the sanctity of the mortgage contract, mortgage contracts won’t mean anything any more, mortgage burrowers will then always be able to get out of their obligation of these mortgage contracts by entering into bankruptcy and getting the bankruptcy judge to adjust the terms of their mortgage contract to more favorable terms. Such Republican claims should be completely ignored because they are a distortion of this initiative, this bankruptcy initiative only applies to subprime mortgages which are a minor percentage of the total number of mortgages issued by mortgage lenders in this country. In addition, most of these subprime loans that are at issue should not have been made in the first place if U.S. mortgage lenders were being responsible, that is, if they reasonably evaluated the burrowers capacity to repay the loan at the offered terms – any fool could see the burrowers would not have the income to make the required loan payments. In effect, what this bankruptcy initiative is all about is providing valuable help to solve a national problem our nation shouldn’t have in the first place. It is really a no brainer, that good leadership calls for supporting this initiative.