Political Debate Over Homeowner Help Bill Centers On Future Effects, Current Programs

Washington, D.C.–President Bush said Tuesday he would veto a bill the Senate Democrats are sponsoring to give homeowners facing foreclosure more bargaining options, The New York Times reported Wednesday.Banks and mortgage lenders also don’t support the bill, which would let bankruptcy court judges alter mortgage terms when restructuring debt in a bankruptcy case. The bill’s supporters–which include consumer and civil rights groups who feel it could help families work out new mortgages that have been packaged into complex securities and sold–say it could stop 600,000 home foreclosures, which can cost lenders more than monthly payment reductions. The supporters also feel the plan would halt the wave of home price declines in neighborhoods with foreclosed homes.However, mortgage lenders and many investment firms who have bought the loans are campaigning against the bill because they feel it would cause higher borrowing costs later on and might send the wrong message to investors.The White House said the bill would “undermine existing contracts” and cause a stricter credit market. The administration also expressed dissatisfaction with provisions to give $4 billion to state and local governments to revamp abandoned homes and offer funding for homeowner counseling.