Home Foreclosure Crisis can be Stopped! Support S. 2636 in the Senate Vote

Dear Senator [Name],

I am supportive of S. 2636, the Foreclosure Prevention Act, and in particular want to emphasize our support for Title IV, which would allow families in bankruptcy to modify their home mortgages through the courts. This provision is a commonsense solution that will help families save their homes without any cost to the U.S. Treasury, while making sure that lenders recover at least what they would have in foreclosure.

Abusive lending practices and slumping real estate markets are causing hundreds of thousands of American families to lose their homes to foreclosure. As devastating as foreclosures have been to date, the worst is yet to come. Foreclosures are expected to accelerate dramatically during 2008, when interest rates are scheduled to rise on a large number of loans.

This nationwide crisis affects not only individual families, but neighborhoods, entire communities, and our national economy. One solution to this serious problem is to give people on the brink of losing their homes more flexibility to restructure their loans in bankruptcy. This solution would not let people "off the hook" in paying their full mortgages; it would simply allow them to work with a judge to figure out how to pay what they owe while staying in their homes. The bankruptcy safety net that permits loan modification to save a yacht, vacation home, commercial real estate or family farm currently is not an option for a family seeking to save a primary residence. In a manner that is both fair and also urgently needed, S. 2636 would eliminate this inequity in the treatment of American homeowners.

It should be understood that the narrowly crafted remedy contained in S. 2636 does not reopen the Bankruptcy Act of 2005. Rather, it addresses 1978 bankruptcy legislation that excludes loans for primary residences from those loans that may be modified in a Chapter 13 bankruptcy. At that time, mortgage loans were nearly all fixed-interest rate instruments with low loan-to-value ratios and were rarely themselves the source of a family's financial distress. This is no longer the case. Preventing the modification of home loans for primary residences makes no sense in an age of subprime exploding ARMs where the mortgage itself causes financial crisis.

While the various voluntary programs that the industry has announced in recent weeks and months are a welcome acknowledgement of the magnitude of the situation, they do nothing to negate the urgent need for this legislation.

[Your comment here]

I applaud you and your colleagues for addressing the foreclosure crisis with the urgency it deserves. I support the court-supervised modification section of S. 2636 and urge speedy passage of this urgently needed reform.

Sincerely,
[Your name]
[Your address]