Just in case you were wondering why there has been a rash of bankruptcy filings in the Merrimack Valley and elsewhere, look no further than the stubborn refusals of the major banks to modify underwater mortgage loans.
Just yesterday, the chiefs of Citi, Chase, Wells Fargo and Bank of America testified before Congress, and told lawmakers they are reducing the amount that troubled borrowers owe on their home loans only in limited cases. “Consumers who make mortgage payments on time are likely to see such reductions as unfair,” they said.
According to the Associated Press, David Lowman, chief executive of Chase’s mortgage business, said large-scale mortgage principal reductions “could be harmful to consumers, investors, and future mortgage market conditions.”
Chase estimates that reducing home loan balances so that no homeowners would owe more than the value of their homes would cost up to $900 billion, with $150 billion of that borne by the government.
That attitude did not sit well with consumers; the AP also reported that “dozens of activists from the Boston-based Neighborhood Assistance Corp. of America chased Lowman through the Rayburn House Office Building, pressing him to do more for homeowners. He did not respond to their requests for a meeting and eventually left the building with the assistance of police.”
Actions like that probably won’t accomplish much, but the anger is perhaps understandable; more than 1.9 million more Americans are expected to lose their homes, and a fair number of those will eventually be filing for bankruptcy.
By Doug Beaton