Will help for homeowners facing foreclosure come too late? That is the fear of lawmakers meeting on Wednesday on Capitol Hill.
Sen. Dick Durbin says little time remains to come up with a plan that will address the problems of homeowners facing foreclosure. Durbin is backing a plan that would force lenders to renegotiate the terms of troubled mortgages.
“There seems to be little willingness on the part of the Bush Administration to back my plan,” Durbin says.
Also testifying on Wednesday is Cook County Sheriff Tom Dart. Dart attracted national attention for imposing a moratorium on evictions executed by his office. The Senate Judiciary Committee, of which Durbin is a member, held hearings that featured, at times, contentious testimony. Durbin is seeking reforms on bankruptcy laws designed to fight foreclosures. Meanwhile, Dart testified on the human costs of the housing crisis.
"It is clear from the present economic conditions, as well as the continuing rise in foreclosure cases, that the time for talking has long passed," Dart said. "A solution is needed right now."
NBC5's Charlie Wojciechowski reported that even though Dart is under a court order to resume evictions on renters whose landlords have defaulted on their mortgages, less than a handful have actually been done. The backlog has been caused in part by new rules Dart asked for giving the renters time to find other places to live.
In October, foreclosures in Illinois were up 24 percent, and demands for evictions also increased. However, despite a reinstatement of the practice by the Cook County Sheriff's Department, only three were executed. "This is utter chaos," Dart said later in an interview with Wojciechowski. "Whether we're talking about the straight foreclosure when someone loses their house, or we're talking about renters."
Durbin says the chances for a more comprehensive bill are good under the incoming administration of President-Elect Barack Obama. When Obama was the junior senator from Illinois, he was among the co-sponsors of Durbin’s bill. Durbin says Obama has personally assured him that addressing the mortgage crisis will be among his first priorities.
Durbin said he hoped to help some families by reviving legislation he introduced last year that would change the bankruptcy laws to allow courts to order restructuring of loans on primary residences.
"As long as there is a chance that that bankruptcy court is going to change the mortgage, it's more likely that the creditors are going to sit down with the homeowner before they reach bankruptcy court and work out an arrangement," Durbin said.