Washington, D.C. – As millions of American homeowners continue to struggle against the tide of home foreclosures, a Rhode Island resident today testified at a U.S. Senate subcommittee hearing about the foreclosure crisis and the idea of using bankruptcy reform to help people stay in their homes.
Joseph Verdelotti Jr., of West Warwick, testified before the Senate Judiciary Committee’s Subcommittee on Administrative Oversight and the Courts about his fight to keep his home in the face of unfair mortgage payments and a declining economy. U.S. Senator Sheldon Whitehouse (D-RI), who chairs the Subcommittee, asked Verdelotti to share his story at the hearing after receiving a letter from him and his wife asking for help.
“It is clear to me that Congress must do more to help struggling American homeowners,” said Whitehouse. “If we fail to act, I fear that we put ourselves at risk: that a vicious cycle of foreclosures, falling home values, and declining tax revenues will keep us in recession for years to come.”
Verdelotti purchased a home in 2006 at the height of the housing bubble, and took out two mortgages to finance the purchase. As the economy began to decline, it became increasingly difficult for Verdelotti and his family to keep up with payments, prompting them to request modifications of their mortgage terms in order to lower their monthly payments. Despite making regular mortgage payments in a timely manner, Verdelotti was still denied the opportunity to re-negotiate his mortgage terms, and now risks losing his home.
“All we are asking for is a little help, a little consideration, and a little professionalism on the part of our mortgage holders,” Verdelotti said. “If we’re able to negotiate a more manageable payment plan and keep our home, it becomes a win-win solution for everyone: we keep our home, the banks avoid the costs of foreclosure, and the community avoids a hit to property values and tax collections.”
During today’s proceedings Verdelotti, along with a panel of witnesses including Alys Cohen, a staff attorney for the National Consumer Law Center, and Professor Adam Levitin of the Georgetown University Law Center, discussed the need for further federal intervention in the nation’s foreclosure crisis, including amending U.S. bankruptcy law to allow judges to modify mortgages on principal residences.
Whitehouse cosponsored the Helping Families Save Their Homes in Bankruptcy Act of 2009 (S. 61), introduced by Sen. Dick Durbin (D-IL), which would allow bankruptcy judges to modify the terms of home mortgages, in the same manner that they are currently permitted to modify the terms of almost every other type of contract. A version of the legislation was defeated in a Senate floor vote earlier this year. Today’s hearing examined whether, given the worsening foreclosure crisis, the time has come to reexamine bankruptcy reform.
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