WASHINGTON -U.S. Senator Tom Udall, D-N.M., today urged the Senate to support a provision to allow homeowners struggling with excessive mortgages due to the economic downturn to get relief through bankruptcy proceedings. The legislation would have put pressure on bankers who purchased unsound loans to voluntarily restructure mortgages and allow families to stay in their primary residences.
Udall noted that current law allows real estate speculators and wealthy Americans to receive mortgage modification for loans taken to purchase second and third homes, but families who could be left homeless cannot have the principal on the mortgage on their only residence reduced by a judge.
"I have yet to hear a good reason why working Americans should not have the same rights as every real estate speculator and vacation home owner in this country," said Udall. "My constituents don't think that's fair, and they are right."
The Durbin Amendment would have helped prevent an estimated 6,665 New Mexico homeowners from falling into foreclosure and stop nearly $376 million in home equity from evaporating as foreclosures lower home values across the state.
Said Udall, "Without spending a dime in federal money, this Congress can make a significant contribution to stabilizing my state's housing market and keep thousands of families in their homes. This is not a tough choice."
Udall also pointed to academic experts who have said that a mortgage modification provision like the one considered today will help resolve the nation's financial problems by helping to end uncertainty about the value of mortgage-based securities.
Elizabeth Warren, head of the financial market rescue Congressional Oversight Board, has argued that mortgage modification legislation will help America overcome its current economic crisis. Adam Levitin, a professor at Georgetown Law School who recently completed a study of the issue, has concluded that mortgage modification will bring substantial benefits without harm to the mortgage market.
"The current system is unfair; it is bad for working families; and, it is devastating for the American economy," said Udall. "The Durbin Amendment is a step in the right direction."
After the vote, Udall expressed disappointment but pledged to continue working to find solutions for New Mexico homeowners.
"I am extremely disappointed that the Senate did not support this commonsense, compromise legislation," said Udall. "With more than 8 million homes facing foreclosure, we cannot let this setback stop us. We must keep working to find ways to protect America's homeowners."
To see Senator Udall's complete statement from the Senate floor, click here.
