ACCESS Supports “Helping Americans Save Their Homes Act”

WASHINGTON - American Consumer Credit Education Support Services supports Senator Richard Durbin’s Helping Americans Save Their Homes Act (S 2136). The bill would amend current bankruptcy law, giving judges the option of forcing lenders to adjust the terms of home mortgages.

“The current law specifically prevents bankruptcy judges presiding over Chapter 13 cases from adjusting the terms of a mortgage for a primary residence,” said Jim Malmberg, Managing Director of ACCESS. “When someone files for bankruptcy, any pending foreclosure is halted. But if the person filing misses any more payments, the foreclosure process starts all over again and the court can’t intervene to stop it. Senator Durbin’s bill will change that.”

Until 2005, bankruptcy judges routinely forced lenders to change the terms of home loans in order to prevent foreclosure. When Congress changed the bankruptcy law, lobbyists for the banking industry were successful in stopping this practice. Ironically, there is growing evidence that the current law has actually backfired on banks. Many consumers are now electing to pay their credit card bills and simply walk away from their homes; leaving mortgage holders with properties that they don’t really want. Not only do foreclosures hurt the families that are losing their homes, they also hurt entire neighborhoods by driving down home prices. In neighborhoods with many abandoned homes, increases in criminal activity are also common.

“It is our believe that S 2136 and its counterpart in the House of Representatives (HR 3609) could help as many as 500,000 families keep their homes and help stabilize falling real estate prices”, said Malmberg. “Although many lenders are against this proposed change in the law, if they examine the bills they may come to realize that the change will also help them. The alternative is to have lenders take over the ownership of hundreds of thousands of homes and then being forced to sell those homes at fire sale prices. Under those circumstances, everyone including the lenders will lose.”

About ACCESS:

ACCESS (American Consumer Credit Education Support Services) is a non-profit 501(c) (3) organization dedicated to the privacy of individual consumers’ financial information, and to assisting victims of incorrect credit reporting, identity theft and financial fraud. ACCESS website is designed to serve as a source of news, information and community for both victims and those who would like to avoid becoming a victim of current practices within the credit industry. The access website can be found at http://www.GuardMyCreditFile.org.