AARP CEO Bill Novelli pledged to work with Congress and the Administration to address the nation’s most serious challenges at an event where he outlined the organization’s annual legislative and advocacy priorities. In outlining the AARP agenda for the 111th Congress, Novelli stressed the need to provide economic relief for America, fix our health care system, and provide training to ensure older workers have skills to be competitive in the workforce and help enable automatic enrollment in retirement savings programs for workers of all ages. All of AARP’s goals are very traditional senior care goals but most surprising was the stance that AARP is taking on a way to solve the housing crisis…..here is the direct quote from the press release:
• Helping Homeowners: Enact legislation that would allow bankruptcy judges the discretion to modify primary mortgage debt so more Americans facing foreclosure can stay in their homes.
Allowing bankruptcy judges to modify mortgages during a bankruptcy process is vehemently opposed by almost every financial institution and fixed income investor because it provides bankruptcy judges with a large amount of power to value assets at their discretion. While this provides some relief for the borrower, it ultimately devastates the value of the asset held by the financial institution or the investor. AARP is a very powerful lobbyist in Washington, DC and it make me think that there may be some political sway exerted here by other members of Congress to have AARP back this part of any economic stimulus package in exchange for addressing some of the other more aligned with AARP’s traditional priorities associated with health care and retirement savings.
Senator Dick Durbin of Illinois also introduced the Helping Families Save Their Homes in Bankruptcy Act on January 6, the same day that AARP released its results of its survey and announced its legislative priorities. A companion bill was introduced in the House of Representatives today by Rep. Conyers (D-MI) and Senator Durbin is also working to include the bill’s language in the upcoming economic stimulus package. While Durbin argues that this modification costs tax payers nothing, it means two things: bankruptcy courts and lawyers will be booming and that the continued problems that Wall Street has valuing assets will be exacerbated on loans or investments backed by residential mortgages of primary residences. Even though Citibank has agreed on a plan to let bankruptcy judges alter home loans in an effort to prevent foreclosures don’t expect many others to follow without the heavy influence of Uncle Sam and his TARP money.
For the full AARP Press Release, click here.