Blue Dog Democrats made their deal, and Chapter 13 mortgage cramdown legislation is one step closer.
Changes include having to provide your income, expenses and debts to the mortgage company while seeking modification, which must be done to be eligible for judicial modification of a first mortgage securing your residence.
The bankruptcy court would determine whether this provision is complied with by what the band has done in offering a modification before bankruptcy.
In determining of the home value, courts would have to use “federal appraisal guidelines.”
No one knows what those are now, they may be included as details are drafted.
There is another hurdle, the loan must be “unaffordable to the borrower.”
More work for the judges there!
Unaffordable, in what context? Most people have other debts, so, does this test count credit cards? Vehicle loans? Credit union debts?
Do you look at those as being paid before the mortgage? Not at all? A percentage?
Specific language yet to be drafted may determine these issues, or, courts will decide on a case by case basis.
I predict further failure on the modification front, no reason to believe the mortgage companies will get their act together now.
As readers of this blog well know, we have been pushing for this type of legislation since we started.
The final bill still needs to pass the full House, and then the Senate, though the President says he will sign it.
Let your Senators know what you think!
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