18 Oct CEO of Litton Loan Disses Bankruptcy Judges
As a possible remedy to the subprime mortgage crisis, Congress is currently considering a number of bills that would allow the Bankruptcy Court to modify the terms of residential mortgages. A story on NPR on October 17, 2007 discussing these bills, which would offer some protection to the millions of homeowners facing foreclosure from exploding ARM mortgages gave some insight to the thinking of the “big money” behind the subprime mortgage crisis. According to the story, although one housing group estimates that the bill could help over 600,000 people avoid foreclosure, those in the financial industry are dead set against it.
Larry Litton, Jr., the CEO of Litton Loan, was dismissive and insulting to bankruptcy judges:
“It’s an unmitigated disaster. You start giving bankruptcy judges the ability to go in and modify loans, and there’s no control over that. We don’t like it at all.”
Had somebody exercised a bit of control over Mr. Litton and his company when they were making NINJA (No Income No Job No Asset) loans, loans where monthly payments exceeded the borrower’s monthly income, loans where the monthly payments increased to levels that they knew the borrowers couldn’t afford, perhaps the financial market wouldn’t be in this mess in the first place.
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