Mortgage giant Credit Suisse has looked at the ever-increasing number of foreclosures and determined that what’s causing the problem is…
No, not the poor subprime loans it made.
No, not improper underwriting, oversight or supervision.
No, not economic issues.
Rather, the problem is BAPCPA—the changes to the Bankruptcy Code adopted in 2005 at the urging (and millions of dollars in campaign contributions) of the credit card and lending industry.
Credit Suisse’s article argues that because the Means Test and other BAPCPA changes push more people into five-year Chapter 13 repayment plans (which let them save their homes from foreclosure), they don’t get their money fast enough. As John Lackow notes in his TPM Cafe blog, “it’s hardly what those lenders expected they were getting from the ‘05 law.”
Looks as if the doctrine of unintended consequences of this massively flawed law is starting to rear its ugly head yet again.
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