Changing Mortgages in Chapter 13’s–Is It Time?

31 Dec Changing Mortgages in Chapter 13’s–Is It Time?

Today’s Wall Street Journal (December 31, 2008) has a front-page story titled, “Mortgage ‘Cram-Downs’ Loom as Foreclosures Mount.” Discussed is the question of whether the new congress will allow “cram-downs” of residential mortgages in Chapter 13 and 11 cases.

A cram-down is where the terms of a mortgage are changed in bankruptcy. The interest rate can be lowered to market rate, principal can be reduced to the value of the property, and the loan term can be extended. Is this a new power bankruptcy judges are seeking? Hardly. For years, bankruptcy courts have done exactly the same things in commercial cases, and on houses that aren’t the sole security for a mortgage loan (such as vacation homes, or homes that are security for a business loan).

So why is it a problem now? Frankly, I’m not entirely sure.

Here is a way to stop foreclosures, restore the cashflow of monthly payments to mortgage lenders, and stop the constant downward pressure on housing prices caused by the glut of foreclosed homes on the market…ALL WITHOUT SPENDING A DIME OF THE TAXPAYERS’ MONEY! You’d think that people would be jumping up and down demanding that Congress pass it. And they should.

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Brett Weiss, a senior partner at The Weiss Law Group, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11, and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his colleague, Daniel Press, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the previous Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute and the Bankruptcy Bar Association of Maryland. He has received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, the United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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