In view of the crisis in the housing industry, Senator Dodd, Chairman of the Senate Banking Committee, announced that he would spearhead legislation that would allow homeowners nearing foreclosures to file for bankruptcy in court. The said legal move would sop lenders from acquiring mortgaged properties.
The Senator is not really new with the program. It could be recalled that Dodd also put the same initiative last year. Despite the earlier failure, the Senator is still positive. He cited that the political environment has already shifted. He thinks that more and more lawmakers are now concerned, if not alarmed, by the growing number of foreclosure properties across the country.
As of press time, the number of foreclosure homes has grew to 936, 439. California-based firm RealtyTrac said that the month of October alone has recorded nearly 85,000 foreclosure properties. The company also said that, compared to the rates of September, the October figures showed a 5% increase.
The alarming numbers of foreclosures have gained prominence since last year. Government offices and lending companies have already made moves to solve the situation. However, Dodd and members of the Senate Banking Committee believe that the efforts were just not enough.
Dodd also said that he supports Federal Deposit Insurance Corp’s Chairman Sheila Bair in her proposal to make use of the $700 billion bailout funds to help delinquent borrowers lower their monthly mortgage payments. The Senator also said that he was “confounded” when he learned that Treasury Secretary Hank Paulson opposed Bair’s proposal.
In his opinion, the worsening foreclosure crisis is the main cause of the bigger problem in the financial industry. He said that the government might not be able to solve the alarming economic situation if it does not get to the root of the problem.
Dodd made no assurance that he will help institutionalize the proposal made by the FDIC Chair. He believes that jawboning would work to convince Secretary Paulson.
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