Congress will soon pass a law to let you Cramdown your Mortgage in Bankruptcy and Lower your Payments and Principal
The Durbin Amendment (S.61)will come up to vote this week in the Senate and my sources tell me we now have 60 votes to cut-off debate and bring the amendment and the bill up for a full vote. I expect to get about 52 votes for the Final Amended Bill
The Problem
Credit Suisse estimates that as many as 1 in 6 mortgages in America will be lost to foreclosure in the next four years. Each foreclosure is a tragedy for the family thrown out on the street. But these failing mortgages have also destroyed the global financial markets by severely damaging the value of the securities that are based on them. Even though trillions of American taxpayer dollars have been allocated towards reducing the threat that these “toxic” assets will bring down the global financial system, the risk of further economic destruction will remain until the underlying mortgages that are the root of the problem are stabilized. Helping families save their homes is one of the most urgent moral and economic imperatives that America faces.
The Solution
The Senate will soon be given the opportunity to help solve this crisis by preventing 1.7 million mortgages from falling into foreclosure and preserving over $300 billion in home equity for neighboring homeowners who have made each of their own mortgage payments on time (according to estimates from Moody’s Economy.com and the Center for Responsible Lending). The Durbin amendment to the Helping Families Save Their Homes Act would finally create the necessary incentives such that failing mortgages would be voluntarily restructured on the scale that is required to turn the economy around, and is the most important step that Congress can take in helping to implement the Obama Administration’s Homeowner Assistance and Stability Plan. The objective of the amendment is to encourage the servicers of troubled homeowners to offer aggressive loan modifications that would keep families in their homes, which compared to the only other alternative – foreclosure – is more profitable for the banks, more secure for the families, and more stable for the surrounding neighborhoods. It would do so by allowing borrowers at risk of foreclosure to receive assistance from the bankruptcy courts in restructuring that loan, but only if the servicer of that loan has not offered to modify that loan outside of court. The amendment would not cost the American taxpayers one penny.
How It Would Work
Specifically, if a servicer provides either a modification offer that complies with the Obama Administration’s Homeowner Affordability and Stability Plan that reduces the family’s monthly payment to 31% or less of their income, or a refinancing offer that complies with the Hope for Homeowners program as modified by this housing bill, that offer would preclude a borrower from receiving a primary mortgage modification in bankruptcy (low income borrowers must be offered a more aggressive modification for the servicer to maintain the veto). In addition, only primary mortgages originated before 1/1/09, with outstanding principal less than $729,750, that are at least 60 days delinquent, and for which a foreclosure notice has been sent could be modified in bankruptcy.
For those borrowers that do not receive a modification offer from their servicer, that meet all of the other criteria above, and require assistance in bankruptcy, the courts could only reduce the loan principal to fair market value (which is more than the lender would collect if the home is sold in foreclosure), reduce the interest rate to the conventional rate plus a reasonable premium for risk (which at the moment would equal around 6.5% to 7%), and lengthen the term to the longer of 40 years reduced by the period for which the mortgage has been outstanding or the remaining term of the mortgage. If the loan principal is reduced in bankruptcy, the borrower must evenly split any price appreciation with the lender up to the original principal amount if the home is sold while the borrower is still in bankruptcy. These bankruptcy provisions would sunset when the Housing Affordability and Stability Plan ends in 2012.
Support
The amendment is supported by Citigroup, AARP, Consumer Federation of America, Leadership Conference on Civil Rights, AFL-CIO, SEIU, Center for Responsible Lending, National Association of Consumer Bankruptcy Attorneys, and dozens of other groups.
Bill DEFEATED 45-51
All Republicans and 11 Dems voted against this bill
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Well, I guess you will not be able to pay for your bad choice
out of my pocket.
"The deepest sin against the human mind is to believe things without evidence." Thomas H. Huxley
Senator's Push for Cramdown Legislation Falls Short
Senator's Push for Cramdown Legislation Falls Short in Advance of Vote on Housing Bill
For the second straight year, cramdown legislation championed by Senate Majority Whip Dick Durbin (D-Ill.) looks poised to fall short in the face of opposition from Republicans, a block of moderate Democrats and many financial institutions, CongressDaily reported today. The cramdown provision will be offered as an amendment today and will need 60 votes to pass, Senate Majority Leader Harry Reid (D-Nev.) said yesterday. Critics said that Durbin and other cramdown backers failed to reach out aggressively to Senate moderates who had doubts about the bill and focused too heavily on cutting deals with financial institutions before reaching out to lawmakers.Speaking on the floor yesterday, Reid defended Durbin's effort to pass the bill and praised his persistence. "He understands that legislation is the art of compromise, but that can be carried a little too far," Reid said. "Quite frankly, I am very disappointed in the rope-a-dope that has been used on Sen. Durbin." While the cramdown provision has backing from President Obama, he has not gone to bat for it, and a lukewarm endorsement this month from Treasury Secretary Geithner likely did not add votes.
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Senate Votes Today April 30th on this bill
VOTE ON JUDICIAL FORECLOSURE TODAY
We learned this afternoon that the full Senate will take up the House-passed Housing bill ("Helping Families Save Their Homes Act") later this week. At that time, Senator Durbin will offer a revised version of S. 61 as an amendment to the bill. Here are two documents for your reference: a summary of the so-called Durbin amendment and a state-by-state breakdown of the 1.7 million homes nationwide it can help save.
While the revised language of the Durbin amendment narrows considerably the availability of mortgage modification in bankruptcy, we are told that this is the best we will get out of the Senate. Indeed, it is going to be an uphill climb to get even this language approved. Because of Senate rules, we need to get 60 votes to be successful. At the moment, we believe we are close but not quite there yet.
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Housing Collapse part two..
This "Cram Down" scheme will crush real estate values, mortgages and banks. Think about it, now this "Cram Down" is sold on your block, immediately devaluing ever other house on that block to a new even lower level. The Banks (no love lost) have to take more losses on their books. The guy below, rightfully walks away from his mortgage which he is now upside down 65-85% (mortgage to market value). More bad paper enters the mortgage markets, passed on to the banks in bundles, passed on to the markets in securities, and we have last year all over again, BRILLIANT!!! Glad I am renting and holding cash/silver. I plan on scooping up what I can, and financing as much as I can, so when the inflation hits, the debt is evaporated...key is income properties. Like my friend below, many ex-home owners are or will soon be renters, driving rental prices up..and paying off the financing (that inflation doesn't evaporate). 4Plex, Tri-Plex, Du-Plex...BTW..you can get 3.5% down FHA no doc loans to accomplish this "money changers trick" and beat them at their own games. What most don't understand is, to the Banker, recessions are profit taking season in the form of hard assets.
Banking Groups Urge Senate to Reject Mortgage Mod Bill
WASHINGTON (AP) - A dozen financial groups, including the U.S. Chamber of Commerce and American Bankers Association, on Wednesday urged every member of the U.S. Senate to reject a key piece of President Barack Obama's plan to keep tens of thousands of Americans from losing their homes.
The letter to senators was the latest push by an industry that has helped stall the proposal, which would have let debt-ridden homeowners reduce their payments in bankruptcy court. The Senate was expected to defeat the measure on Thursday.
The plan faces nearly unanimous opposition by Republicans and has caused hesitation by several Democrats who say they share industry's concerns that the forced easing, or "cram-down" of mortgage terms would ultimately drive up interest rates and further freeze credit lines.
"The housing market is already unstable and enacting cram-down legislation would make things worse by adding even more risk to the mortgage market, effectively undermining efforts by Congress and the administration to stabilize housing," the bankers wrote in a letter sent to each senator.
In February, Obama announced his plan to save some 9 million debt-ridden individuals from losing their homes by providing incentives to lenders to cut homeowners' monthly payments or refinance loans for individuals whose home's market value has sunk below what they owe.
As part of the plan, Obama said he also wanted to change bankruptcy laws so a judge can reduce a person's mortgage payment based on its market value if the homeowner had otherwise been unable to modify their loan.
While cast as a last resort, the bankruptcy option would have arguably had the most immediate impact in stemming the tide of foreclosures facing the nation.
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This feeds the welfare state
as we know it. To qualify the loan must be greater than 31% of your GROSS income. That only saves the highest risk loans. This is all being done not to save the people but Freddie and Fannie. Have we lost our minds.
How many times can the books be cooked. The original S&L bailout cost us ten times the original amount of 12 billion. So do the math, when this crazy scandal finally reaches it's grand total amount, don't be too surprised at the true number.
I just had my home appraised, it came in at 2004 pricing. I just lost 60% of my equity (down payment). If it continues to spiral downward to 85-90% I;m renting.
So I pay my mortgage on time every month,
but I don't qualify for a rate reduction unless I quit paying my mortgage on time? That makes total sense. What the hell is wrong with people? Maybe I should have bought a house I couldn't afford. Better yet, a second house down the shore or a new car that I can't afford to make the payments on. I think I will go run up some credit card debt too! Get a new IPhone or something. This is so jive. Rewarding bad behavior. Losing your job is one thing, but this mentality that government needs to take care of me makes me sick. Why the hell can't government stay out of this stuff and let the markets correct themselves? My property value has gone down and now my house is worth less then I paid for it. Is that anybody's fault on the DP? Should you have to pay higher taxes to support some fund that will help the value of my house? Hell no. I will have to live here longer then I expected to and continue to pay my mortgage. I am so sick of this BS. What happened to personal responsibility? I'm going to rant for another hour, but I'll quit typing and spare you all. Peace...
"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."
-Alexis de Tocqueville
So I pay my mortgage on time every month,
but I don't qualify for a rate reduction unless I quit paying my mortgage on time? That makes total sense. What the hell is wrong with people? Maybe I should have bought a house I couldn't afford. Better yet, a second house down the shore or a new car that I can't afford to make the payments on. I think I will go run up some credit card debt too! Get a new IPhone or something. This is so jive. Rewarding bad behavior. Losing your job is one thing, but this mentality that government needs to take care of me makes me sick. Why the hell can't government stay out of this stuff and let the markets correct themselves? My property value has gone down and now my house is worth less then I paid for it. Is that anybody's fault on the DP? Should you have to pay higher taxes to support some fund that will help the value of my house? Hell no. I will have to live here longer then I expected to and continue to pay my mortgage. I am so sick of this BS. What happened to personal responsibility? I'm going to rant for another hour, but I'll quit typing and spare you all. Peace...
"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."
-Alexis de Tocqueville
you are the forgotten man!
no one even knows you exist any more...sadly
Fla Atty Claims that Ron Paul’s opposition to Bankruptcy Reform
is hypocritical
http://www.bankruptcylawnetwork.com/2009/03/26/ron-pauls-opp...
Ron Paul gets it right, but why is it that he and other politicians view corporate bankruptcies that reorganize debt (known as Chapter 11) as a reasonable solution to economic calamity, but they view personal bankruptcies that reorganize debts (known as Chapter 13) as “homeowner bailouts”?
How could Dr. Paul say bankruptcy will fix the economy then oppose bankruptcy reform for the Middle Class? After all, the bankruptcy reform bill does nothing more than TEMPORARILY give ordinary Americans the same rights in bankruptcy court as the big boys. Politicians, like Dr. Paul, who oppose bankruptcy equality are hypocrites.
You may email Mr. Parker at:
parker@jaxlawcenter.com
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Fla Atty Claims that Ron Paul’s opposition to Bankruptcy Reform
is hypocritical
http://www.bankruptcylawnetwork.com/2009/03/26/ron-pauls-opp...
Ron Paul gets it right, but why is it that he and other politicians view corporate bankruptcies that reorganize debt (known as Chapter 11) as a reasonable solution to economic calamity, but they view personal bankruptcies that reorganize debts (known as Chapter 13) as “homeowner bailouts”?
How could Dr. Paul say bankruptcy will fix the economy then oppose bankruptcy reform for the Middle Class? After all, the bankruptcy reform bill does nothing more than TEMPORARILY give ordinary Americans the same rights in bankruptcy court as the big boys. Politicians, like Dr. Paul, who oppose bankruptcy equality are hypocrites.
You may email Mr. Parker at:
parker@jaxlawcenter.com
Follow me on Twitter for breaking news on Ron Paul and the U.S. Economy:
www.twitter.com/AbolishTheFed
Fla Atty Claims that Ron Paul’s opposition to Bankruptcy Reform
is hypocritical
http://www.bankruptcylawnetwork.com/2009/03/26/ron-pauls-opp...
Ron Paul gets it right, but why is it that he and other politicians view corporate bankruptcies that reorganize debt (known as Chapter 11) as a reasonable solution to economic calamity, but they view personal bankruptcies that reorganize debts (known as Chapter 13) as “homeowner bailouts”?
How could Dr. Paul say bankruptcy will fix the economy then oppose bankruptcy reform for the Middle Class? After all, the bankruptcy reform bill does nothing more than TEMPORARILY give ordinary Americans the same rights in bankruptcy court as the big boys. Politicians, like Dr. Paul, who oppose bankruptcy equality are hypocrites.
You may email Mr. Parker at:
parker@jaxlawcenter.com
Follow me on Twitter for breaking news on Ron Paul and the U.S. Economy:
www.twitter.com/AbolishTheFed
Fla Atty Claims that Ron Paul’s opposition to Bankruptcy Reform
is hypocritical
http://www.bankruptcylawnetwork.com/2009/03/26/ron-pauls-opp...
Ron Paul gets it right, but why is it that he and other politicians view corporate bankruptcies that reorganize debt (known as Chapter 11) as a reasonable solution to economic calamity, but they view personal bankruptcies that reorganize debts (known as Chapter 13) as “homeowner bailouts”?
How could Dr. Paul say bankruptcy will fix the economy then oppose bankruptcy reform for the Middle Class? After all, the bankruptcy reform bill does nothing more than TEMPORARILY give ordinary Americans the same rights in bankruptcy court as the big boys. Politicians, like Dr. Paul, who oppose bankruptcy equality are hypocrites.
You may email Mr. Parker at:
parker@jaxlawcenter.com
Follow me on Twitter for breaking news on Ron Paul and the U.S. Economy:
www.twitter.com/AbolishTheFed
Fla Atty Claims that Ron Paul’s opposition to Bankruptcy Reform
is hypocritical
http://www.bankruptcylawnetwork.com/2009/03/26/ron-pauls-opp...
Ron Paul gets it right, but why is it that he and other politicians view corporate bankruptcies that reorganize debt (known as Chapter 11) as a reasonable solution to economic calamity, but they view personal bankruptcies that reorganize debts (known as Chapter 13) as “homeowner bailouts”?
How could Dr. Paul say bankruptcy will fix the economy then oppose bankruptcy reform for the Middle Class? After all, the bankruptcy reform bill does nothing more than TEMPORARILY give ordinary Americans the same rights in bankruptcy court as the big boys. Politicians, like Dr. Paul, who oppose bankruptcy equality are hypocrites.
You may email Mr. Parker at:
parker@jaxlawcenter.com
Follow me on Twitter for breaking news on Ron Paul and the U.S. Economy:
www.twitter.com/AbolishTheFed
More nonsense
There's no way I could support a bill such as this because it encourages bad behavior. The instant this passes is the instant I stop paying my mortgage. If a mortgage must be 60 days past due in order to get a better loan rate, then that's what I'll do.
Voluntary....not.
The bill claims to use market incentives as a means of having lenders and borrowers modify their current agreements voluntarily. My question, why aren't they already making modifications voluntarily, seeing as how both sides stand to gain? The borrower stays in their home, and the lender ensures that they will get back their money. The only difference here is the heavy-hand of the government trying to add further incentives to a truly voluntary market process.
At any rate, if you have too many houses on the market, and the values of houses are decreasing, the solution isn't to make legislation to stabilize a necessary decline in housing prices. Rather, the solution is to allow prices to fall so that they are an actual reflection of the supply of houses vs. the demand for housing, rather than a tool for maintaining the value of debt-backed securities as a means of propping up the banking industry.
Its not difficult to understand that we will have an easier time moving out of this depression if the government would allow the voluntary actions of individuals within the market to adjust the value of objects within the market. All the government is doing by impeding the pricing mechanism is to slow economic recovery by maintaining this wasteful extention of capital in unprofitable ventures. If government would allow individuals to make corrections within the pricing mechanism, we would be left on a more sound footing, whereupon new investments can be made in the productive private sector.
Why did you even bother to post this here? The economic logic behind this is illogical, and the support it has garnered has mostly been incredible. Do you honestly believe that having the Federal government tamper with the pricing mechanism of the banking, and housing industries, as well as those branching from them, will do anything to solve our troubles? I think not. Historically speaking, we've been trying to plan the economy for neigh on a century now, and the only thing we've proven is that the Austrian's have been correct in their prescription that a socialist system (of any type; be it some type of market-socialism, or even municipalism) will fail because the coercive power which the state must extend upon the system will render the pricing mechanism useless for economic calculation. I hope that you will reconsider your enthusiasm for the government's solution to the problem they started by overextending their coercive power beyond that of our limiting Constitution.
Tu ne cede malis, sed contra audentior ito.
To give DP'rs information on an impending law change
All the people here who claim to love the Constitution forget or don't know that the Constitution that you so revere is the source of bankruptcy and it expressly allows the federal government (bot the state govts) to impair contracts.
Do what Ron Paul says and READ the Constitution.
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The houses aren't worth the mortgages
when do we address the devaluation of the homes? This is an unfolding process and home prices will continue to fall.
S 61 addresses this issue
Will let you CRAM DOWN the mortgage note balance to current FMV of home--
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But subject to being someone who is over levered to begin with
translating to further punishing all those who were/are not over levered who get to continue to pay an over valued mortgage with no cram down as punishment for having not spent their way into near oblivion.
CRAM DOWN ALL/EQUITABLY or don't....this is just another bad bill
Corporations have been Cramming Down Debt for years
in Chapter 11 cases and I see no one here complaining about that
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Actually there have been many a post regarding the bailing out
of the banks and the goings on at GM and Chrysler but it's apples and oranges to compare Corporate with Individual when there remains no real incentive for the individual to plan with foresight, act accordingly and keep their credit managed and their nose to the grindstone due to these proposed wide scale individual, non equitable bailouts.
The corporation still has an incentive to stay out of bankruptcy/cram down situation both for future viability and market share retention (and therefore profit). If we bail out all the imprudent homeowners, remove the consequences of those actions there is no incentive for anyone to continue to be prudent any society crumbles.
In the corporate case ie) Ford's refusal of bailout money because they don't want Government interference/ownership in their business, planning to avoid downturn and bankruptcy/cram down by obtaining a cushion a couple years back in order to weather a storm like that we are now experiencing and deciding not to get into home financing like its cross town rival to supplement sluggish sales and lack luster break even by unit due to high labor inputs versus the behavior of "G"overnment "M"otors and "C"ongressional Motors over the past decade who will now NEVER emerge as truly viable entities...(needs a whole different thread).
Yes, corporations are free to get into trouble ie) Chrysler and GM and while bailed out as "deemed to big to fail" and crammed down in or out of bankruptcy, they will still pay dearly for having walked that primrose path. I am not alone in deciding not to contemplate purchase of these brands in the future. They will pay even if they emerge from this, both in lost future market share and therefore profit and in viability/debt issuance etc. EVEN if they produce a better widget down the road. They are subject ultimately to a verdict delivered by the market that buys automobiles. We will have to wait and see how that goes obviously but I'd bet money on consumer backlash.
The homeowner who for whatever reason bites off more than they can chew suffers the consequence in bankruptcy resulting in home loss and lack of credit. Time to learn a valuable lesson and then start anew. Once we remove the consequence we condone by default and we will get more of the same and more and more will jump on the bandwagon.
Mish: Foreclosure Prevention Bill Shields Servicers From Fraud
"Inquiring minds are investigating provisions of a foreclosure prevention plan working its way through Congress. The plan throws away more taxpayer money while shielding servicers from misconduct. In other words, the bill does exactly what one might expect from this Congress and this administration."
http://globaleconomicanalysis.blogspot.com/2009/04/foreclosu...
You Gotta Love It Don't Ya?
From Mish-The article Michael linked to:
"Now, lenders will receive $2,500 to refinance a borrower into Hope for Homeowners and $1,000 a year for up to three years as long as the borrower stays current....The bill hugely rewards servicers for every loan they modify. This creates an incentive for servicers such as Countrywide (Bank of America) to modify loans whether or not that is in best interest of the mortgage holders. Worse yet, the Safe Harbor Provision goes one step further and shields servicers if they do commit such fraud.
I am not a lawyer, but I believe both the servicer incentives and the safe harbor provision are unconstitutional. President Obama, like president Bush before him, appears to have no concern for the constitution."
How to continue the looting of the American taxpayer for the benefit of the banks while appearing to "help" I swear they think we all fell off the turnip truck last night and/or they simply don't care and therefore don't represent us.
Nice to see a Lively Discussion Here
This is why this place exists
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Ya see! This is how they do it!
They pick out certain groups, and give them other people's money, and then that group starts liking them and voting for them.
Because alot of people like it when they are on the receiving(benefit) end of theft. They suspend their principles, when they are "getting".
This is exactly how the "class warfare" and "gov't handout" industries got going.
And some people here are falling for this crap?
Bump
Octobox
*&^ Constitution --- Constitutional Rationality
Didn't Herr Marx want it this way?
Is BHO a Socialist?
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Solving the wrong problem
"But these failing mortgages have also destroyed the global financial markets by severely damaging the value of the securities that are based on them."
How about not securitizing every dang thing that moves? It was the all the money they could make off securitizing the debt that drove the predatory practices and the no-money-down-interest-only-40-year-mortgage nightmare scenarios.