Knowknot, thanks for your comments.
What is constitutional and what is not constitutional with respect to debt contracts has been a matter of intense debate and controversy ever since the beginning of the constitution, especially during periods of recession or depression, in which the conflict between creditors and debtors intensifies. Indeed, I would argue that the movement for the new constitution in the 1780s was led mainly by creditors, seeking government protection to enforce debt contracts against the Shays Rebellion-type farmers, who were storming the courts and demanding precisely a moratorium on foreclosures of their farms, and other stay laws. However, the constitutional judgments have waxed and waned over the last 220 years, and have generally favored debtors during economic crisis (e.g. the moratoria on house and farm foreclosures during the Great Depression). So I agree that the constitutionality of a moratorium on house foreclosures today is not guaranteed, but I think there is substantial precedent to support it, especially as the crisis worsens. On your second point, why do you say that allowing bankruptcy judges to modify the terms of mortgages contracts would affect only a very tiny number of homeowners? Because only a small number of potential foreclosures would declare bankruptcy? Perhaps you are right about this. But at least I think this option should be available to homeowners. And also perhaps revise the foreclosure law to allow for similar judicial modifications without bankruptcy. Fred Quoting [EMAIL PROTECTED]:
On 5/14/08, [EMAIL PROTECTED] said > [T]o learn more about current proposals for government > policies to reduce housing foreclosures . . . two excellent > websites are: > > Center of Economic and Policy Research (Dean Baker): > http://www.cepr.net > > Center for Responsible Lending: > http://www.responsiblelending.org > > * * * Baker's [preferred] proposal is . . . an > "own-to-rent" plan, which would allow homeowners > to stay in their homes as tenants (for up to 10 years), > and would pay the prevailing rent in the area. More > details on the CEPR website . . . . . . . which claims that "without any big bailouts or new bureaucracies[,] Congress can simply [sic] change the rules on foreclosure (just as it changed the rules on bankruptcy two years ago), so that homeowners facing foreclosure will have the option to rent their home indefinitely at the fair market rent . . . . determined by an independent appraiser, appointed by [a court administer[ing this program] in the same way that foreclosures are already overseen by judges . . . . simply [sic] chang[ing] the rules under which foreclosures can be put into effect] . . . ." The Baker/CEPR proposal would also provide: "Rents will be adjusted in later years by the Labor Department's consumer price index for rents in the area [subject to reasonable procedures for a challenge by] the owner or renter . . . . After the foreclosure, the mortgage holder is free to resell the house, but the buyer is still bound by the commitment to accept the former homeowner as a tenant indefinitely." Not to point too fine a point on the matter, but -- besides and apart from the use of "simply" in the Real Politick sense (though what might occur on a state by state basis, but over a very long period of time, may be a different matter, how realistic/probable is it that Congress would pass such a law?) -- on what grounds would both each of above different elements of such a (federal) law avoid being ruled unconstitutional? > The CRL supports a bill . . . introduced in both the > House and Senate which [makes most sense to me > and which] would allow bankruptcy judges to modify > the terms of mortgage contracts to make them more > affordable . . . . [re. which see] the CRL website. As desirable, as far as it goes, including as fair as this proposal may be (such a provision has long been in effect for commercial debtors in Ch.XI bankruptcies), wouldn't this proposal affect only a comparatively very tiny number of even the most "moral hazard" free homeowners?
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