Paid too much for your house? O’Biden’s gotcha covered

There is a bunch of debate analysis available on the Web, but there is one answer that I wanted to review this morning. The question concerned the Bankruptcy Abuse Prevention and Consumer Protection Act, which set specific standards concerning the ability to file Chapter 7 or Chapter 13 bankruptcy.

O’Binden wants to allow courts to adjust both the interest rate on mortgages as well as lower the total principal you owe on your loan if you’re having trouble paying your debts. Who the heck do they think they are? Who’s going to pay the difference?

I have the full question and response listed below, but I can not believe that Democrats get away with this kind of crap rhetoric.

Biden was pretty darn clear. If you can not afford your home payments, just stop by your local bankruptcy court and let them know you’re having some trouble paying your bills. O’Biden would allow the judge to take a look at your income, expenses and debts and arbitrarily decide that you paid too much money for your house.

If you still owe $150,000 and can’t afford to pay a $1,000 mortgage, will the judge call you over and ask you how much you can afford and just lower the principal and interest rate to match what you can pay?

If the judge cuts the principal down to a “more manageable” $100,000, who covers the $50,000 difference? The bank already cut the check to the original owner of the property.

Do we go back to the seller and tell them that they made too much money? Maybe we should hit them with a windfall profit tax? If you don’t think that possible, you don’t know socialism.

IFILL: Sen. Biden, you voted for this bankruptcy bill. Sen. Obama voted against it. Some people have said that mortgage-holders really paid the price.

BIDEN: Well, mortgage-holders didn’t pay the price. Only 10 percent of the people who are — have been affected by this whole switch from Chapter 7 to Chapter 13 — it gets complicated.

But the point of this — Barack Obama saw the glass as half- empty. I saw it as half-full. We disagreed on that, and 85 senators voted one way, and 15 voted the other way.

But here’s the deal. Barack Obama pointed out two years ago that there was a subprime mortgage crisis and wrote to the secretary of Treasury. And he said, “You’d better get on the stick here. You’d better look at it.”

John McCain said as early as last December, quote — I’m paraphrasing — “I’m surprised about this subprime mortgage crisis,” number one.

Number two, with regard to bankruptcy now, Gwen, what we should be doing now — and Barack Obama and I support it — we should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you’re paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe, the principal that you owe.

That would keep people in their homes, actually help banks by keeping it from going under. But John McCain, as I understand it — I’m not sure of this, but I believe John McCain and the governor don’t support that.

There are ways to help people now. And there — ways that we’re offering are not being supported by — by the Bush administration nor do I believe by John McCain and Gov. Palin.

American Digest has more.

Rush just discussed this today at the end of the first hour.

No other bloggers I follow are really hitting hard on this subject, so pass the link to this page around will ya?

Sidebar: I’m no expert on the Bankruptcy Abuse Prevention and Consumer Protection Act, but my quick read indicates that standards were set concerning the ability to file for Chapter 7 or Chapter 13. My guess is there were some judges out there using their own opinion on whether someone should be charged with paying off debts over time, or just cutting all of the debts free.

People in the exact same financial situation were probably getting different judgments.

So why not set some specific standards based on your income in the state that you live, how much you make and how much you owe.