It’s back. I’ve been writing for nearly a year about the Democrats’ attempts to allow bankruptcy judges to rewrite home loans and and radically expand government’s role in meddling with private contracts. They tried to attach it to last year’s stimulus.
And now, they’re poised to attach it to Obama’s Generational Theft Act of 2009.
Democratic lawmakers have reached a deal with Citigroup Inc. on a plan to let bankruptcy judges alter home loans in an effort to prevent foreclosures and urged other lenders to follow suit.
The lawmakers aim to attach the plan to President-elect Barack Obama’s economic stimulus legislation, and said Thursday the change in bankruptcy law could ease the foreclosure crisis that has dragged the economy into the worst recession in decades.
The compromise between Citigroup and Sens. Richard Durbin of Illinois, Charles Schumer and Christopher Dodd of Connecticut, would be limited to loans made before the bill is signed. Obama has said he backs the concept.
Bottom line: We will all pay higher mortgage rates because of this. Banks will have to factor it into their pricing.
Message from the government? As I’ve said before, these federal foreclosure prevention measures send a loud and clear signal to responsible borrowers: