South Florida Paralegal Blog

Lawmakers have been busy passing legislation to help homeowners at risk of losing their homes. First there was HOPE NOW, in which lenders, counselors and the government work with borrowers to help them keep their homes. While the White House says the plan will help 1.2 million homeowners, independent studies suggest it would actually help far fewer. Regardless, if you are having trouble paying your mortgage, it's a good starting point. You may also call HOPE NOW at 1-888-995-HOPE.

On December 20, 2007, the President signed into law The Mortgage Forgiveness Debt Relief Act of 2008. 

"Families dealing with the pain of a foreclosure should not have the double whammy of a large tax bill for terminating their mortgage through no fault of their own," said Ways and Means Committee Chairman Charles B. Rangel. "I am pleased the Committee joined together to unanimously pass this critical legislation and I look forward to bringing this measure before the full House."

What Chairman Rangel really should have said was "it is absolutely absurd that IRS rules previously allowed a homeowner who lost their home to be hit with a tax bill in the first place. It is the perverted thinking of Washington that someone who loses their home has somehow received income." Of course, he wouldn't ever say that, but he should have.

And finally, a house panel narrowly approved a measure that would allow bankruptcy judges to lower the balance a borrower owes on their home as well as change the interest rate and other terms. Backers argue that it is needed to help people stay in their homes. Those against it (including lenders.... surprise!) argue that bankruptcy judges have no business getting involved in a contract between a lender and a borrower. They argue that it isn't government's job to bail out people who made bad financial decisions.

I usually agree that government shouldn't bail out people who were greedy,  made poor investment decisions or just didn't read their loan documents, but in this case, drastic measures are needed. The effect of the housing and mortgage crisis is trickling down to every sector of the economy and we face the real risk of a serious recession. That's bad news for everyone, lenders included.

Additionally, this administration hasn't been very, how should I say, "consumer friendly" in the past seven years. The "hands-off, low-tax, let-the-market-fix-itself" approach hasn't seemed to do much for reigning in gas and food prices, boosting worker's wages and making health insurance more affordable.

Maybe having government stick their nose into the economy a little more can help some people. We'll have to wait and see.