Wednesday, December 19, 2007

The Effect of Bankruptcy Reform on Mortgage Interest Rates

That is the title of a post on TPMCafe. I second the bottom line of that article, bankruptcy reform will have NO effect on interest rates.

One of the items used to sell the previous bankruptcy reform in 2005 was the savings everyone would benefit from, $400 was thrown around, by the change in the law. There has been no reduction in interest rates, just a continuing flow of profits to credit lenders.

Now, after billions in fees and interest from mortgage lending over the last several years, mortgage lenders are suffering. Poor baby. Suck it up. It is called RISK and you have many ways of calculating it. Your failure is not our problem.

The current bill, H.R. 3609 does much good for people facing foreclosure with little overall impact on mortgage lenders except the perception that they only sell cash cows to their investors.

For once, I support THIS bankruptcy reform!

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