31 Jan Credit Suisse Supports Bankruptcy Code Change
In an article published on the internet, Credit Suisse has come out in favor of a proposed change to the Bankruptcy Code to allow Bankruptcy Judges to modify residential mortgages. This is now the second major lender who supports this common sense change. Citibank previously issued support for the change. More lenders are considering the benefits of mortgage modification as a way of preserving their businesses and consumers’ homes.
The proposal grants Bankruptcy Judges authority to reduce mortgage balances to the fair market value of the property in a Chapter 13 case. Payment terms also would be adjusted to fit a consumer’s ability to pay by reducing the interest rate and extending the payment period to as much as forty years. Analysts working for Credit Suisse determined that the impact of such a change would be modestly positive, eliminating about 20% of foreclosures and addressing about 70% of all loans in default.
Congress is considering such a proposal right now. It was taken out of the House version of the President’s stimulus package, but is part of a Senate bill that recently made its way out of committee. Now is the time to write and call your Senators and Representatives to balance the power between lenders and consumers.