Bankruptcy Reform Proposal from Senator Durbin

This is a press release from Senator Dick Durbin regarding his proposed bankruptcy reform legislation.

The text of Senator Durbin's bill can be found at http://thomas.loc.gov/cgi-bin/query/z?c111:S.61:

DURBIN DISCUSSES FORECLOSURE CRISIS, MORTGAGE BANKRUPTCY REFORM WITH HOUSING SECRETARY NOMINEE

 Wednesday, January 14, 2009

 [WASHINGTON, D.C.] – U.S. Senator Dick Durbin (D-IL) met with Shaun Donovan, President-elect Barack Obama’s nominee to head the Department of Housing and Urban Development (HUD), today, where he discussed the foreclosure crisis with the nominee and confirmed Donovan’s support of Durbin’s Helping Families Save Their Homes in Bankruptcy Act, a bill that will allow homeowners at risk of foreclosure to alter the terms of their mortgages in bankruptcy.

 

“Shaun Donovan will be an excellent HUD Secretary and will play a central role in the resolution of the current housing crisis,” Durbin said. “Under his leadership, HUD can help stem the tide of foreclosures and move the housing market, and the broader economy, back on track. I look forward to working closely with him to help those at risk of foreclosures keep their homes.”

 

Durbin urged Donovan to see that the bankruptcy measure would be part of the upcoming economic recovery package. Donovan agreed that judicial modifications of troubled mortgages are appropriate and pledged to work towards its quick passage.

Earlier this month, Durbin reintroduced legislation that would change the outdated bankruptcy code to allow at-risk homeowners to alter the terms of their mortgages in bankruptcy. He first introduced this bill in the fall of 2007, when experts estimated that nearly 2 million homeowners were at risk of losing their homes to foreclosure. Over the last fourteen months, that number has quadrupled. Today nearly 8.1 million homeowners - 16 percent of all homeowners - are at risk of foreclosure.

 

Last week, Citigroup, one of the nation’s largest mortgage lenders, announced its support of the legislation, splitting the industry that had once opposed the bill.

 

President-Elect Obama announced his plans to nominate Mr. Donovan on December 13th. Donovan, the current head of New York City’s Department of Housing Preservation and Development, will play a major role in reversing the current housing and economic crisis in the Obama Administration.

 

At his confirmation hearing yesterday before the Senate Banking Committee, Donovan said, “Clearly the most important public policy decision facing Congress and the new Administration is how to best ease the economic pain that millions of American families are feeling right now because of our unsteady housing markets. Housing is at the root of the market crisis we are now experiencing, and HUD must be part of the solution.”