As a San Diego bankruptcy attorney, I try to stay up-to-date on the latest in consumer news. Today was a most interesting read of the newspaper. Financial stories abound each day, the news is filled with tales of the stock market crash and the double dip recession (was there ever a rise to double dip?). Here are a smattering of headlines that caught my eye:
But the one that really caught my attention was the following:
Really? Is this some kind of joke?
For years, literally, the leadership of the National Association of Bankruptcy Attorneys and our membership have traveled to Washington, DC to lobby our government ‘leaders’ to put a stop to the ongoing foreclosure crisis, and keep families in their homes. (I hasten to point out that NACBA’s efforts are bi-partisan, as the foreclosure crisis, not surprisingly, crosses party lines). Those efforts began in earnest in early 2007 and have continued non stop to this day. All for naught as the continued preying upon the middle class America has resulted in 250,000 homes owned by the government and another 800,000 in some form of foreclosure status.
Our position has been that it is a much better solution to allow working American families to retain and pay for their homes at a discount, as opposed to foreclosures which result in empty homes and depreciated values for all in the neighborhood. This article suggests that homes in foreclosure sell at a 20% discount on average. One of our proposals was to allow a Bankruptcy Court Chapter 13 bankruptcy plan determine the appropriate discount so that the homeowner could keep their homestead as opposed to foreclosure. ( I need to mention that there are other bankruptcy alternatives to stave off a foreclosure, so those in financial pain should still counsel with a qualified bankruptcy attorney to determine what options are available to stop a foreclosure, or reduce the debt owing against the home). There were many arguments made against this proposal, personal responsibility, stability of real estate contracts, and capacity of the Courts in calculating the discounts, amongst others.
The loudest argument against was the notion that the market needed to correct itself. Let the free market determine the equilibrium point. Well, now I guess we see it. About 1,000,000 homes per year lost to foreclosure and an estimated 20% drop in value, with the further decline in value for those in surrounding homes. Oh, and those folks that lost their homes, lost their American dream? Why don’t we just rent them their homes back? Incredible.