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Mending the mortgage crisis

February 08, 2009

Re: Michael Hiltzik's business column, "Give bankruptcy judges a chance to fix home loans," Feb 2:

Since the beginning of the mortgage crisis, dozens of proposals have been floating around to try to help millions of people at risk of losing their homes to foreclosure.

Banks are aware of all the proposals, but in the end, they do whatever they want. So no loan modifications, forbearances or short sales have the certainty that they would succeed. They are only proposals.

Banks are opposed to giving bankruptcy judges the power to fix home loans because, if this law passes, they will for the first time lose control of the mortgage debt.

Isaac Bensussen

San Diego

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I would try to solve the problem by limiting the bankruptcy changes to loans made between mid-2004 and mid-2008, the so-called toxic loans. The exception for mortgage loans has been in the code for a long time and has caused no problems.

It does not need to be changed forever. It just needs to deal with a crisis caused by a short departure from traditional underwriting standards. This will help those who need help now but allow the mortgage industry to package mortgage products in the future and sell them to investors without the added problem of explaining a new risk to them.

Jonathan Hubbell

Laguna Niguel

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