Zandi: Hope Now No Sub for Bankruptcy Relief

The Hope Now initiative might help 250,000 subprime borrowers avoid foreclosure, but another 2 million homeowners are likely to lose their homes over the next 24 months if they can't petition the bankruptcy courts for relief, according to economist Mark Zandi."While the Hope Now initiative is laudable, it should not forestall passage of H.R. 3609 to provide hard-pressed homeowners facing foreclosure more protection in a Chapter 13 bankruptcy," the chief economist at Moody's Economy.com told a House Judiciary panel. Former Housing Secretary Jack Kemp also testified in favor of the bill, which would allow bankruptcy judges to reduce the interest rate and principal amount of a residential mortgage. But the Mortgage Bankers Association warned that passage of the bankruptcy bill could destabilize the mortgage market. "This would have an immediate and severe impact on the mortgage market as companies book the diminished value of their loans and servicing rights," MBA chairman-elect David Kittle said.