Mortgage Bankers Want Your Home, Not Your Money

11 Feb Mortgage Bankers Want Your Home, Not Your Money

Congress is considering changes to the Bankruptcy Code that would allow the same judicial modification of home mortgages that is currently allowed for vacation homes, business property, and other assets. Letting families keep their homes by reducing principal and interest to market value would let tens of thousands of homeowners resume making their mortgage payments, halt many of the 46,000 foreclosures that are taking place each week, and stop the glut of foreclosed homes on the market that are continually ratcheting housing prices downward.

But surprise, surprise, the Mortgage Bankers Association opposes these changes. Why? Let’s look at the facts.

They first say that including these changes is “a polarizing issue” that threatens to bring down a crucial measure this country needs in order to avoid a serious economic downturn. Seems that this wasn’t “polarizing” until the MBA started arguing that it was. I guess that if the country is in favor of letting people save their homes, and the MBA wants to foreclose on them, in “bankspeak” that constitutes polarization.

They next argue that, “the lending community remains united against this idea.” Not true. Citibank, the country’s largest bank, supports it.

Next is the wonderful sentence: “It is our position that if this proposal were to become law, mortgage rates would increase in cost by 150 basis points.” Note that the MBA doesn’t say, “studies show,” or “data demonstrates” or even “the fact is” that this increase will occur. Only, “It is our position” that this would happen.

From now on, it is “My Position” that I can eat all I want without gaining a pound. By making it “my position,” I don’t need to offer any proof. And there isn’t any.

Although judicial modification is available to every other type of secured loan it doesn’t result in increases in loan rates, higher down payments or higher costs at closing. In fact, judicial modification of residential loans is already available in Chapter 12 bankruptcy, which is available to family farmers. Has its availability resulted in an increase in loan or borrowing costs? No! And has the epidemic of foreclosures resulted in lower interest rates, lower downpayments or lower closing costs? No!

It must be nice to put out these press releases without having to provide any justification. Sort of reminds me of the things the mortgage bankers did that got us into this mess in the first place.

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Brett Weiss, a senior partner at Chung & Press, 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 law partner, 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 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, the Bankruptcy Bar Association of Maryland, and the Civil Justice Network. He has been recognized as a “Super Lawyer” every year since 2007 for Maryland and the District of Columbia, and in 2011 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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