Urging Congress to enact judicial mortgage modification is what 140 members of the National Association of Consumer Bankruptcy Attorneys and I were doing in Washington DC yesterday. We answered all the banking industry arguments, such as “fairness”.
So, the Chapter 13 bankruptcy reform would let the homeowner A, Mary, whose house is now worth 100,000, pay a modified mortgage of $100,000 instead of the $150,000 she owes now on that first mortgage. Say her next door neighbor, Elmer, also is stuck in a $100,000 home, but he can afford, and keeps paying, his $150,000 first mortgage. Is that fair to Elmer, the guy who keeps paying? You bet! Why? Let’s look at the alternatives for Mary: let the house be foreclosed, live there for free as long as possible, then move. Takes minimum 8 months in Michigan for this process. Foreclosing mortgage company then takes over, and sells it as fast as possible, for $100,000, or less. Effect on Elmer? He is still living next to someone who is paying $100,000 for the house for which he is paying $150,000. Only now, there is a sale on the real estate brokers’ multi-list, further lowering the value of his house. Or, Mary bolts for another state, as so many Michiganians have. No one cuts the grass, place is vandalized. That will really help Elmer. What about voluntary mortgage modification? Well, that highly touted Hope Now federal government program from last summer? Ain’t workin’. The federal government modification program has yet to modify its first mortgage. That’s right. Zip, zero, nada. Even the President understands the logic of this judicial mortgage modification. So, yes, the new Chapter 13 bankruptcy law is fair to Elmer. Even though Elmer is paying the mortgage company with one pocket making the payment, and they have their hands in his other pocket getting bailout money through the taxes he paid. Now, is that fair?
No related posts.
{ 1 trackback }
Comments on this entry are closed.