cramdown Tag

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.
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16 Jan New Bankruptcy Law May Not Solve the Foreclosure Crisis?

Bloomberg reporter Jody Shenn's recent article suggests that mortgage modifications in Chapter 13 bankruptcy - the subject of the proposed bankruptcy amendment – may not stem the tide of foreclosures in this country. Well, Duh. The new bankruptcy amendment allowing mortgage “cramdown” requires that the debtor be in imminent threat of foreclosure. In other words, if a homeowner is scraping by, but nonetheless is staying current with the mortgage, he is not eligible for relief. Therefore, he must stop making mortgage payments and default on the mortgage to become eligible for cramdown. Invariably, this country will see an INCREASE in default rates after the enactment of the new bankruptcy provisions, but this is not proof that cramdown is ineffective. To the contrary, because cramdown IS the solution to the collapsed housing market, average Americans will do what is necessary to become eligible for the program.
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08 Jan CitiBank And Home Builders Support Mortgage Modification

One of the world's biggest banks has agreed to support changes in the bankruptcy code to give judges the power to modify mortgages on the debtors home. Citigroup, Inc., has signed on with Senator Dick Durbin to S 61, a bill titled the "Helping Families Save Their Homes in Bankruptcy Act of 2009." Senator Durbin's bill permits a bankruptcy judge to reduce the principal and interest rate and even extend the term of a troubled home loan. The Wall Street Journal has reported a deal between the bank and the proponents of this important legislation.Advocates consider it a significant breakthrough to have a major banking institution like CitiBank sign on as a supporter of "cramdown" as a method to modify home mortgages.
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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...

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