WASHINGTON, D.C.//February 18, 2009///The following statement was issued today on behalf of the 3,500-member National Association of Consumer Bankruptcy Attorneys (NACBA) by bankruptcy attorney and NACBA president Carey Ebert of Fort Worth, TX:
“At a time when an estimated 6,600 American families are losing their homes to foreclosure every day, we welcome the Obama Administration’s support for changes to existing bankruptcy laws that will allow for judicial modification of home mortgages. The Obama Administration is the latest major player in this national debate to recognize the fact that judicial modification must be part of the solution to today’s worsening home mortgage foreclosure crisis.
It is painfully clear that the continuing, and indeed worsening, foreclosure crisis is perhaps the single largest impediment to this country’s economic recovery. We call on the banking industry to impose a moratorium on foreclosures until the Obama housing plan, including and in particular bankruptcy reform, has been fully implemented.
Just as important as forbearance by the banking industry is the need for action by Congress NOW. We agree with consumer advocates and others who say that Congress and the Administration should move with the same sense of urgency on curtailing this threat as they did with the economic recovery bill just signed into law.
Ever since the mortgage foreclosure crisis erupted into the public view in 2007, a broad array of consumer, civil rights, housing, community, labor and other organizations, as well as economists, have advocated judicial mortgage modification relief as an effective approach to stemming the growing tide of foreclosures – a solution that, unlike every other solution being considered in Washington, comes at absolutely no cost to U.S. taxpayers. This is one solution we know will work. The infrastructure already is in place. It is something the bankruptcy courts do every day with other assets. And, estimates are that this solution alone could cut foreclosures by at least 20 percent.
Data released by NACBA and others make it very clear that the foreclosure crisis will not be resolved through top-down voluntary efforts on the part of the financial services industry alone, no matter how many carrots or incentives are given. Judicial mortgage modification cuts through the impediments to sustainable mortgages. Courts must be empowered to implement economically rational loan modifications where the parties are unwilling or unable to do so on their own.”