Key Democratic lawmakers are courting support from the financial services industry, including credit unions, for legislation that would allow bankruptcy judges to modify mortgages.
The provision passed the House last week but has not been scheduled for a Senate vote. The Senate had been expected to take up the bill as soon as this week, but it now could be delayed a few weeks, perhaps until after Easter, some congressional aides said.
Many Republicans continue to oppose the measure. Even though it once appeared the legislation was likely to pass, "I really believe the momentum has slowed," said Sen. Bob Corker (R-Tenn.), a member of the Senate Banking Committee, which has jurisdiction over the legislation.
Under the measure, bankruptcy judges could reduce the principal on a homeowner's mortgage as well as cut the interest rate and extend the terms — provisions known as cramdowns.
Friday, March 13, 2009
Senate Democrats seeking support for mortgage cramdown legislation
From today's Washington Post:
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Alrighty then. While this will probably result in the democrats corrupt crony judges gaining too much power; it will be even more deflation with more downward pressure on prices!
ReplyDeleteWhile it might slow the flow of forclosures initially it still doesn't address the problem. After the investors get throughly trashed rates should be high and prices in the crapper.
Enjoy,
James
Home values are already down below what they were in more than 20 years. Many lenders are unwilling to help people with hardships. It's cheaper for the banks to foreclose. The government doesn't really care about the American people. The government gives our tax money to banks that have already ripped us off to give out bonuses to their workers, who did a crappy job to begin with. The current Bankruptcy Laws only benefit investers and banks not the average Joe like the laws used to. The Cram-down would at least allow millions of American people to stay in their homes.
ReplyDeleteJennifer-NV said...
ReplyDelete"Home values are already down below what they were in more than 20 years."
You start out with a blatantly false statement, then it's all down hill from there.
For the U.S. as a whole, inflation-adjusted home prices are more expensive today than they were at any point during the 20th century.
I think the cramdown legislation is a good thing.
ReplyDeletelenders, fearing legal costs, would be
much more proactive in recasting rates for
borrowers threatening bankruptcy. In fact very few banks would
ever let a judge anywhere near adjusting mortgage principal. Banks
will finally be working FOR the homeowner.
Here's why I don't think banks will be harmed: Because their
current stock prices (both common and preferred) already have
worst case scenarios built into them! have you seen the stock
prices of Citigroup and BOA? With Cramdown, the market would very
quickly learn the true value of every bank's loan portfolio. In
fact, I predict this would improve bank share prices (in the long run)
If the banks get their way regarding "mark to model" instead of
"mark to market", we will only be kicking this can (problem)
further down the road.
This is what happens when you let just anyone post comments. You get uneducated rantings, false statements and grossly misleading representations of the facts.
ReplyDeleteTo begin with, a modification of the loan balance by a judge will NOT affect home values. It only becomes a comp and affects values when it is sold. (As in the grossly underpriced sale of a foreclosed property)
A foreclosure will cost a lender considerably more than allowing for a cramdown. A judge will reduce the mortgage balance to the fair market value.
A foreclosure will cost the lender $25,000 - $40,000 just to get the property back. They will then be lucky to sell the property a year down the road, for about 60% of the fair market value.
Your homework assignment is to explain to the class, which scenario will result in the greatest loss to the lender/investor!
you are forgetting that most mortgage-backed securities are owned by investors -- pension funds, mutual funds. it isn't just the "bank" that loses. however, the bank does stand to lose because of the credit default swaps that they bought guaranteeing many of the securities.
ReplyDelete"for about 60% of the fair market value."
ReplyDelete60% off 1998 pre bubble prices??!!! I cant wait for the prices to drop to that!!!!! Man that would be a dream, I could even afford a mcMansion then!
"you are forgetting that most mortgage-backed securities are owned by investors -- pension funds, mutual funds. it isn't just the "bank" that loses."
ReplyDeleteYeah its all the assholes who contributed to the bubble! I love it!
i defer to anon 1:08
ReplyDelete"This is what happens when you let just anyone post comments..."
Only because of vested interest and power brokering are mortgages off limits to bankruptcy judges, All other type of debt is subject to the logic and common sense of the BK trustee.....EXCEPT mortgages. Sound fishy? It is. Let's get the consumer on a fair playing field. The cram down is good for America, because it is ethical and honest. Calling all people in trouble due to scam loans as criminal obfuscates ALL parties responsible. CRAM DOWN is fair, good law, common sense and should be enacted to stabilize the economy and take it out of the free fall.
ReplyDeleteI could care less about the cram down bill. I’m going to walk away from my home and rent for a year or two at a fraction of the cost of my current payment. Then I’m going to buy a house that’s much better than the one I’m currently in, at half the price. This way I won’t have to wait 10 years to pay down my negative equity and I can start anew accruing positive equity. This is going to save me hundreds of thousands of dollars and a judge won’t be able to lock me into the crappy situation I’m in now. You poor fools that paid off your homes will be the big losers, because your loss of equity is my gain….maybe I’ll buy your house at a fraction of its current value.
ReplyDeleteNow what do you think of the cram down bill? I strongly suggest that we find ways to keep people paying their current mortgage, however modified. Ask yourself, why is a foreclosure a big deal when you have negative equity and a market with falling prices. People may be thanking banks that take their home. Oh, you say it will hurt their credit. The last I heard, people with good credit can’t get credit. And somebody has to be approved for all of these newly foreclosed homes. I suspect there will be renewed pressure to put people back into mortgages that have the ability to pay, regardless of past credit blemishes.
I say to everyone, pick your poison.
obama, why are you letting this issue die, dont allow the republicans to distract you from this mission, this is a crucial part of your plan. GET THIS SCHEDULED FOR FINAL VOTE NOW. YOU ARE BEING TRICKED AND THIS BILL IS BEING PUT ON THE BACK BURNER IT IS BEING BURIED WITH OTHER ISSUES.
ReplyDeleteThe public can see what Senators
ReplyDeleteare going over to a bank lobbyist
home for Easter dinner. Easter
dinner and campaign money!!!!
I WILL NOT BE VOTING FOR ANY]
OF YOU!!!!!!! SO VOTE YES
TO THE HR 1106 (S61). THE PUBLIC
IS WATCHING THESE DEBATES.
HELP US! PLEASE HELP PUSH THROUGH S.61 NOW...
ReplyDeleteHelping Families Save Their Homes in Bankruptcy Act of 2009
S. 61 is consistent with the goal of offering assistance to homeowners making a good-faith effort to stay current on their mortgage payments. Judicial modification is a last resort, no-cost option to foreclosure that may keep as many as 1.8 million FAMILIES their homes, according to Credit Suisse. Granting bankruptcy judges this authority gives home mortgages on primary residences the same treatment as vacations homes, yachts or investment properties owned by wealthier borrowers. Why should those facing financial crises, whose homes are their most valued asset, be denied relief given to others?
S. 61 will help honest, hard working homeowners who may have been lured into predatory loans, suffered economic hardships, or who are overwhelmed by medical expenses, save their homes from foreclosure. Keeping people in their homes has the added benefit of helping to stabilize devastated neighborhoods and will give our economy a much need boost.
Please support S. 61 and oppose efforts to weaken it. Thank you
HELP US! PLEASE HELP PUSH THROUGH S.61 NOW...
ReplyDeleteHelping Families Save Their Homes in Bankruptcy Act of 2009
S. 61 is consistent with the goal of offering assistance to homeowners making a good-faith effort to stay current on their mortgage payments. Judicial modification is a last resort, no-cost option to foreclosure that may keep as many as 1.8 million FAMILIES their homes, according to Credit Suisse. Granting bankruptcy judges this authority gives home mortgages on primary residences the same treatment as vacations homes, yachts or investment properties owned by wealthier borrowers. Why should those facing financial crises, whose homes are their most valued asset, be denied relief given to others?
S. 61 will help honest, hard working homeowners who may have been lured into predatory loans, suffered economic hardships, or who are overwhelmed by medical expenses, save their homes from foreclosure. Keeping people in their homes has the added benefit of helping to stabilize devastated neighborhoods and will give our economy a much need boost.
Please support S. 61 and oppose efforts to weaken it. Thank you
Anonymous, you are now resorting to posting duplicate copies of the same comment. I'm about to start flagging your comments as spam.
ReplyDeleteAs previously stated by most, it would take a bank a year to sell a foreclosed home, which would be equal to the cramdown anyway. What we, as consumers and government, is put money back in flow. Once money starts flowing again, prices will increase. I agree that alot of people bit off more than they could chew, but it was Fannie Mae and Freddie Mac that put the cheese in the trap. Now, they are receiving funds for their wrong doing, but not serving the consequences of the innocent people that they have sold their product to. If your item don't work, shouldn't, as a consumer, have some kind of right to a refund? Or, should the consumer be refused and the lender to receive more tax monies from responsible taxpayers to continue to exploit their product? All in all, let the banks take the loss, make properties more affordable, and get monies paid to them at a reasonabe rate to get money flowing again. That would make both parties stronger, yet the banks are so stubborn, so greedy, so corrupt, that they will do anything to make you go to the gutter while they will take the last crumb on the table even if it takes their Mother's life.
ReplyDeleteSO CLOSE BUT YET SO FAR ! THE BOTTOM LINE IS THAT ...THE SENATE NEEDS 60 VOTES IN FAVOR OF 1106...60 VOTES AND THE BILL IS AT LEAST 10 VOTES SHY AT THIS TIME 4/3/2009. SENATORS SUCH KYL(AZ) ARE ALREADY BOUGHT OFF BY BANK LOBBYIST. "GOOGLE" SENATOR KYL ARIZONA AND READ HIS COMMENTS AND YOU WILL SEE FOR YOURSELF. VERY ARROGANT AND COULD CARE LESS ABOUT YOUR CONCERNS OF LOSING YOUR HOME ! YET ARIZONA IS ONE OF THE WORST FORECLOSURE STATES. IT IS TIME TO EMAIL, CALL, MAIL ALL... SENATORS AND BE UPSET AND DEMAND THIS BILL BE PASSED! FLAT OUT SAY. "SAVE OUR HOMES AND PASS HR 1106 BILL" OR FACE NOT BEING REELECTED AND LABELED "BOUGHT OFF". YOU HAVE 2 WEEKS IF YOU CARE ABOUT THIS BILL PASSING TO MAKE YOUR VOICE BE HEARD.. DON'T PUT IT OFF AND REGRET YOU DIDN'T MAKE YOUR VOICE HEARD AFTER THE FACT. SIMPLE "GOOGLE" YOUR OR ANY OTHER STATE AND "US SENATOR". EMAIL, CALL AND OVERWELM THEM THAT THIS BILL NEEDS TO BE PASSED. CONTACT AS MANY AS YOU CAN,IT ONLY TAKES MINUTES "MAKE YOUR VOICE HEARD". THE TIME IS NOW ! THE SENATE IS OFF FOR 2 WEEKS, WHEN THEY RETURN THIS WILL BE 1 OF THE FIRST BILLS ON THE AGENA. LEAVE THEM A PILE OF EMAILS, MESSAGES, LETTERS.
ReplyDelete