LCCR Urges Congress to Pass Bankruptcy Relief For Homeowners to Quell Foreclosure Crisis

WASHINGTON – Nancy Zirkin, Executive Vice President of the Leadership Conference on Civil Rights (LCCR), gave the following statement at a press conference on Capitol Hill today to announce the “Helping Families Save Their Homes in Bankruptcy” legislation by Sen. Dick Durbin (D-IL) and Rep. Brad Miller (D-NC):

 “Homeownership has always been vital to the communities that LCCR represents.  We argued for years that the modern mortgage system was terribly flawed, with countless irresponsible and abusive loans made, and we called for better regulations. 

Now, after years of denial, and with a recent estimate from Credit Suisse that increases its projection of 6.5 million foreclosures to up to 10 million – it is quite obvious that the mortgage crisis is definitely not ‘contained.’  And – the collective response, to date, which has been based on voluntary industry action, has done little to help.

It’s clear that the best way to quickly reduce foreclosures is to let desperate homeowners modify their loans in court.  It would give borrowers leverage to deal with servicers, and give them a last resort when negotiations don’t work.

It doesn’t use public funds – and more importantly, it quickly would help other homeowners and our economy by keeping the value of other homes from falling, stopping a vicious cycle.

We know that the Durbin and Miller bills have faced intense opposition from the industry, which is ironic, given how many lenders have gone to bankruptcy court themselves.  The industry says that allowing bankruptcy would make investors hesitant, limiting ‘access to credit’ for minority populations.  The fact is that, right now, most people don’t have much access to credit anyway.

So far, the industry has been wrong every step of the way on this issue.  And because loans are now so complicated, voluntary efforts are not helping enough, and cannot be a substitute for helping homeowners directly.  The stakes are too high, because the credit crisis won’t be mitigated until we drastically reduce foreclosures.

We strongly urge members of Congress to pass bankruptcy relief for homeowners when they return in January.  And we are very grateful to Senator Durbin and Congressman Miller for making sure it will be high on the agenda.”