By David G. Kittle, chairman-elect, Mortgage Bankers Association - 03/31/08 04:45 PM EDT
The current situation in the housing market is a desperate time in our history, and there is legislation in Congress right now that equally qualifies as a desperate measure.
It is bankruptcy reform, and it’s being peddled by some as the best solution to the foreclosure problem. For all of its well-intentioned language, the current bankruptcy proposals in both houses of Congress will result in higher interest rates, larger down payment requirements and tighter lending restrictions, all to the detriment of future borrowers.
Why? Because lenders will respond to new risks associated with loans being altered by a judge. The result — the American Dream of homeownership will be put on hold for millions.
Proponents claim that 600,000 people will be helped via bankruptcy. There were 800,000 bankruptcy filings in 2007 — 600,000 more will swamp the system and inhibit its ability to adjudicate cases in a timely manner. Furthermore, two-thirds of bankruptcy proceedings ultimately fail. Translation: The typical bankruptcy scenario helps only 200,000.
The real winners in bankruptcy reform are bankruptcy attorneys. At an average of $3,000 per filing, this group stands to gain $1.8 billion.
Industry-led initiatives, such as HOPE NOW, have already helped more than one million Americans keep their homes through loan workouts. That’s almost twice as many as those who could be helped by bankruptcy reform.
Going forward, Congress should only consider legislation that helps at-risk borrowers without negatively impacting borrowers or our already fragile economy. Bankruptcy reform is not that piece of legislation.
Medicare payment cuts threaten patients
From Nancy H. Nielsen, M.D., president-elect, American Medical Association
This week, physicians from across the nation will join the American Medical Association in Washington to make a house call on Congress. The reason: To call for action to preserve access to healthcare for the millions of senior and disabled Americans who rely on Medicare.
This July, payments to physicians caring for Medicare patients will be slashed, and over 18 months the cuts grow to more than 15 percent while medical practice costs continue to increase. These real cuts have serious consequences, as 60 percent of physicians say they will be forced to limit the number of new Medicare patients they can treat this year.
Sen. Debbie Stabenow (D-Mich.) recently introduced the Save Medicare Act of 2008 (S. 2785) to replace 18 months of payment cuts with updates that better reflect medical practice cost increases. This is a sensible approach to address the short-term access problem, as the timeframe will inject some stability into the system for Medicare patients and their physicians — and give Congress time to begin working on a long-term solution to the broken Medicare physician payment system.
The bill also extends provisions to ensure that rural physicians can continue to care for Medicare patients and continues to fund Medicare’s Physician Quality Reporting Initiative (PQRI). Physicians are deeply committed to improving the quality of care for patients, and 80 percent of the quality measures in the PQRI are from the AMA-convened Physician Consortium for Performance Improvement. Unfortunately, the Medicare cuts create barriers to quality improvement investments. More than two-thirds of physicians say they will defer purchases of information technology this year because of the cut.
Lawmakers should also heed a finding from the AMA’s physician survey: More than half of physicians say that this year’s cut will mean they cannot meet their current payroll and will be forced to reduce office staff.
Last week, Medicare’s trustees projected that physician payment cuts will total 41 percent over nine years, while practice costs increase 20 percent. I shudder to think how these long-term cuts will harm access to care for Medicare patients — right as baby boomers reach Medicare age.