Cramdown!!

[eridani]

Get your congresscritter to sign on!http://www.truthout.org/022509O

House Democrats unveiled a wide-ranging bill on Monday evening to prop up the housing market and most contentiously, empower bankruptcy judges to modify mortgages.

The bill includes a "cramdown" provision that allows judges to write down the principal and interest payments for a homeower's primary residence, something strongly opposed by the financial services industry and mortgage lenders.

House Democratic leaders may bring the bill to the floor for a vote on Thursday. The bill is sponsored by House Judiciary Committee chairman John Conyers (D-Mich.) and House Financial Services Committee chairman Barney Frank (D-Mass.).

When he unveiled his plan last week to help the housing sector, President Obama voiced support for allowing bankruptcy judges to alter mortgages, but emphasized that courts should be seen as a last resort. Loan modifications should be worked through between homeowners and the owner of the mortgage before homeowners turn to judges, he said.

[truebrit71]

1. Can'tor said he would work to stop this bill...not sure how as the minority party have no say...

But if Eric Can'tor and Boner are against a bill, it surely deserves to pass...

[TwilightGardener]

2. I have no problem with judges being allowed to adjust principal/interest payments--

hell, if you have a 30-year that you can't afford, let's spread it to a 40 or 50-year, but with a very low fixed rate so you're not paying considerably more for your house at the end--and then maybe people could refinance/rework the terms later when values go back up. Goal is that you get a little help in payments that keep you from being kicked out in the street. What I am opposed to is simply lowering or forgiving part of the principal--no one should be getting bargains or some sort of payoff from their initially-poor investment.

[Romulox]

3. Bankruptcy courts already have this power.

There is specifically an exception to the general "cram down" power that limits their ability to do this with a primary residence or "910 car"--bankruptcy courts can already lower the principal amount due for a rental or summer home.

[TwilightGardener]

6. So...investors and flippers can get their principal lowered? That's sick.

[Romulox]

7. Yup, they can. Along with virtually any other secured debt...

Think commercial real estate, heavy equipment, purchase money security interests in consumer goods, etc. etc. ALL of these may be "crammed down". The mortgage industry got an exception to the general rule inserted into the Bankrutpcy Code--cram down of secured debt to its present value is rule in bankruptcy, not the exception.

[TwilightGardener]

8. Well, that's just more piss in my cornflakes today.

[Myrina]

4. ... I appreciate that but does it have to get to the point of a bankruptcy judge?

I'd prefer to work with my mortgage company or maybe a 3rd party mediator rather than going all the way to filing bankruptcy in order to keep my house ...

[napi21]

5. I watched a hearing yesterday that was chaired by Maxine Waters.

Whe had a panel of 6 bank reps who headed the mortgage adjustment dept. at their respective banks. EVERY one of the bankers said they are very happy with the President's new program of a standard mtg. adj. plan that will apply to ALL lender/investor held mortgages. Maxine was TERRIFIC as chair of this sub committee and really asked all the right questions.

I don't know how this bill would affect the new plan that is to go into effect March 4th, but from what I heard yesterday, it sounds like tthings are heading in the right direction.