A simple plan to save homes and markets
Both the Obama administration and the Republicans have housing blood on their hands. Obama was silent as Democrats and Republicans in 2009 defeated Illinois Sen. Dick Durbin’s bankruptcy reform bill that would have stopped the foreclosure tidal wave.One simple change in federal law would save millions of families from losing their homes, cost taxpayers nothing, discourage banks from making crazy mortgage loans, put people back to work and restore self-discipline to both lenders and borrowers in the free market. This change is absolutely nothing new, just a return to the way federal law was until 1979. In fact, it’s the way all business, except for residential mortgages, still functions every day.Simply restore the right of bankruptcy judges under the U.S. bankruptcy code to adjust residential mortgages in light of market reality in a meeting with debt-holders. This will save homes, let homeowners pay mortgages, and return sanity to housing markets. The reality principle would encourage lenders to renegotiate loans on the basis of current prices and mortgage rates, and avoid foreclosure and bankruptcy filings.The 1979 changes in bankruptcy court law, and the deregulation of financial derivatives set the stage for the housing market bubble and the global financial meltdown. Underwriting standards were thrown out the window.It’s time for politicians to “put up” and help fix the housing mess, or “shut up” and go on caring more about banks and financial speculators.To hold Washington’s feet to the fire, to demand common sense reforms that will keep millions in their homes and put millions to work, it’s time to organize a housing march on Washington.It’s time for housing advocates, for reform advocates, for Jon Stewart and Stephen Colbert, for the Tea Party, for progressives, for home builders and unions – for all who value homes, jobs and a fair shake in free markets – to come together, on this point alone, to march on Washington this spring to demand common sense housing reform, to restore the power of bankruptcy courts to address home mortgages.This is an idea behind which Americans can come together. To fix the housing market, create millions of jobs, and save millions of homes we don’t need to spend more, or cut more. We just need to come together and demand the politicians put economic reality with checks and balances back into the housing market through restoration of the bankruptcy law.I suggest Saturday, April 4, 2011, for people to gather on the National Mall for this common-sense solution.Roy Morrison is director of the Office for Sustainability at Southern New Hampshire University.