With the nation's housing crisis deepening, Democrats are pushing legislation to let judges lower the monthly mortgage payments of bankrupt homeowners.

The sense of urgency increased Thursday when reports showed foreclosures shot to an all-time high in 2007's final quarter, and that homeowners had more debt on their houses than equity in them for the first time since 1945.

RICK MCKAY/AJC (ENLARGE)

Sen. Johnny Isakson: 'I would compare it [the housing sector] to a patient on the gurney in the emergency room. If you wait too long, you can lose the patient.'

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But Sen. Johnny Isakson (R-Ga.) is fighting the Democrats' Foreclosure Prevention Act while promoting his own bill that takes a very different approach. The former Realtor wants to create a one-time $15,000 tax credit for buyers of houses in foreclosure or new homes started before September 2007.

Q. Why would it be a mistake (to give bankruptcy judges the ability to change terms of mortgage credit)? What would happen?

A. Mortgage rates will go up, and what money is available for mortgages will go down. If we, all of a sudden, say a bankruptcy judge can totally renegotiate the terms of a mortgage, why would you [as an investor] put your money into mortgages? To attract money back to mortgages, the rates would have to go back up, which would be bad for consumers. It just doesn't make any sense.

Q. Home builders built too many houses and now are stuck with huge inventories. Your bill would help bail out builders and Realtors with tax credits. Why should taxpayers be involved?

A. I reject out of hand that it is a bailout. You are providing an incentive for Americans who don't have a home to go buy a home from someone who is in foreclosure. You're driving the market, and in the end, markets work.

Q. In Michigan and Ohio, most of the housing market's troubles are tied to the loss of auto industry jobs. Why doesn't Congress give tax credits to people who buy American cars?

A. Most people don't finance their cars through [loans from automakers] anymore. They use the equity line of credit on their house, and lot of those equity lines have gone negative now. So stabilizing housing values in the United States — where 70 percent of the population owns a house and substantially all of those people have equity lines of credit — is good for automobiles, clothing, college educations and everything else.

Q. So far, 23 senators have signed on to your bill, but only one, Mary Landrieu of Louisiana, is a Democrat. Given that Senate Majority Leader Harry Reid is pushing the Foreclosure Prevention Act, will your bill even get through committee?

A. The Reid bill came directly to the Senate floor without going through committee. But that's the way this is going to happen [with no committee process]. There's a lot of politics going on. We're fully prepared to have a floor substitute bill whenever the Reid bill comes up again.

Q. Although Congress passed the economic stimulus package quickly, housing-related legislation seems to be bogging down. Can Congress move quickly enough to helping the housing market?

A. I would compare it [the housing sector] to a patient on the gurney in the emergency room. If you wait too long, you can lose the patient. The quicker we act, and the more decisively we act, the better off we are.

Q. You spent decades selling residential real estate. Is this worse than any downturn in your experience?

A. I went through four major housing recessions - '68, '74, '81-82 and '90-91. Those were all rough. But this one has the potential to be the toughest one of all.

Q. Did banking regulators fail the American people?

A. There was a time around 2003-04 when the Federal Reserve should have said something to Wall Street because this is a Wall Street problem. Subprime loans didn't exist until Wall Street figured out a way to securitize them.

Q. Should Congress be rewriting banking laws?

A. I don't think there is any question underwriting standards need to be improved.

But I think that is a regulatory issue, not a legislative issue.

Q. So the only thing Congress should be doing right now is passing your bill?

A. I humbly think it is the best proposal floating around in Washington right now.