No-Cost Mortgage Help and FAST!

Why aren't Congress and the Treasury utilizing a simple no-cost fix for the current mortgage foreclosure turmoil? Congress and the deregulators helped create the mortgage meltdown when they prohibited bankruptcy judges from dealing with home mortgage foreclosures in bankruptcy proceedings.

At the behest of bankers, Congress told bankruptcy judges to leave residential mortgage foreclosures alone. This removed risk from the bankers so they could gamble even more heavily on home mortgage "products" which have precipitated the present recession (Depression?).

All Congress has to do is reverse this nitwit legislation so that these courts can have returned to them the right to deal with home mortgages in bankruptcy proceedings. This will have two immediate effects:
1. Foreclosures will come to a standstill until the bankruptcy case is heard. The bank will receive no payments until the judge makes a decision. This pushes mortgageholders to make realistic deals with home owners quickly so as to turn the payment flow back on.
2. With the really recalcitrant mortgage holders, the judge can force a "cramdown" in which the mortgageholder is forced to revise the terms of the mortgage loan in the light of the reality of the morgage market at the time the decision is made. Being obstinate is no longer a valid option.

Instead of throwing billions of taxpayer dollars at the foreclosure problem in a haphazard way (a la TARP, CITI, AIG and all of the other letters), this change in the law will have an immediate effect since mortgage lenders will know that foreclosures are stopped and a knowledgeable judicial review of the situation will be imposed.

Is this obvious solution too sensible to make headway in Washington or do the bankers hold Congress in a more powerful special -interest grip now that the taxpayer has provided them with hundreds of billions of bailout dollars?

For a more complete view on this subject, see http://articles.moneycentral.msn.com/Banking/BankruptcyGuide/a-foreclosure-fix-more-bankruptcies.aspx