Wednesday, July 21, 2010
Economy Bankruptcy Courts and Foreclosures
Posted by Mary Cashiola on Wed, Jul 21, 2010 at 10:08 AM
Every time I write about foreclosures and the mortgage crisis, I feel like I have to leave a bunch of stuff out. This week was no exception.
Last Thursday, the Mid-South Peace & Justice Center held a summit about combating blight in local neighborhoods as part of its Issues First campaign. Then Monday, U.S. Congressman Steve Cohen hosted a subcommittee meeting about foreclosures at the U of M law school.
One thing panelists talked about were proposed changes to the federal bankruptcy code that would allow judges to modify mortgage loans. Currently, filing Chapter 13 allows for the adjustment of debts, with the exception of a mortgage loan for the debtor's primary residence.
There’s some concern that that would mean more bankruptcy filings, but David Kennedy, chief judge of the U.S. Bankruptcy Court for the Western District of Tennessee, testified that wasn’t the case.
“People in mortgage trouble are already in bankruptcy court. They will give up their cars, their pets, they’ll forgo buying medicine. They will do anything to be able to keep their homes,” Kennedy said. “I don’t believe there will be a flood of new filings, because these people are already in the courts. We just can’t help them.”
Congress has encouraged home loan modification through voluntary methods, but they haven't achieved much success.
"Our counselors have found that banks add their own restrictions to the[Home Affordable Modification Program] and the residents don't meet those restrictions," said Steve Lockwood with the Frayser CDC.
Lenders have been reluctant to embrace the proposal — "They don't want to give up control," Kennedy said — but some lenders have started to realize that it might be better for them to work with residents behind on their mortgages.
Once a home goes into foreclosure, lenders typically only collect a portion of the loan, typically about 50 to 60 percent.
Kennedy said that bankruptcy home modification would offer a workable remedy to reduce the nation's home foreclosure and economic crisis.
"Borrowers may avoid surrendering their homes and bearing the costs of relocation. Lenders may collect under a Chapter 13 plan more than they would receive under a foreclosure," he testified. "Neighborhoods may better retain their values. Tax bases would not be eroded to the same degree, and ultimately, individuals who want to be productive members of society may be more likely to successfully complete a Chapter 13 plan."
Comments (12)
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We have Harold Ford, Jr. to thank for voting against his constituents' interests when he voted for the bankruptcy "reform" act in 2005 (one of few democrats who did so).
The law, which was actually written by lobbyists for the financial services industry, excluded primary residences from the protection of the bankruptcy act, although second (and even third) homes were included. Subsequent attempts to amend it by extending protection to primary residences (a so-called "cram down" provision) have been successfully resisted by the financial industry.
So, should we be surprised that Jr. landed a cushy, 7-figure job on Wall Street after that, and has cosseted himself in his wife's luxurious Park Avenue penthouse? Oh, but he knows what's best for Shelby County residents when it comes to the upcoming election. Did I hear someone say "carpetbagger?"
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Yes, how un American our banks are. THey get forced to make loans to idiots who can't afford them, and then when the idiots default, it is the BANKS who get sued.
But wait, that's not enough, NOW some liberal judge gets to tell the bank they can't forclose but instead must let the defaulting party pay less money and keep the house.
I think at some point we need to start the tar and feathering of liberals.
Any bank who would make a mortgage loan to a minority under current conditions needs to have his head examined. There is no motivation to pay the damned loan back. Simply take a loan you cant afford and then let government choke the bank for you.
Idiots!
Oh, Tommy, Tommy: you make this almost too easy.
What is it you don't understand about mortgage fraud, or for that matter fraud in general? I asked you this once before, but you never answered: do you know what the elements of fraud are (without Googling it), and do you know what the defenses to fraud are? I'm still waiting, 'cause, judging by this post, you still haven't figured out the answers.
What is it you don't understand about predatory lending practices? What is it you don't understand about the fact that the FBI has estimated there has been roughly $4 to 6 BILLION in losses annually as a result of this fraud, and has established 77 mortgage fraud task forces and working groups all over the country to deal with it?
What is it about the fact that mortgage brokers, lenders, appraisers and others are the ones who engineered liar, no-doc, low-doc, sub-prime and other mortgage schemes (which they usually inflicted on unsuspecting borrowers) so they could package, securitize and sell those mortgage instruments (CDO's, CMO's etc.) in the secondary market, thereby making BILLIONS of dollars more than they ever could just by servicing those mortgages?
They never could have made the kind of money they did marketing these toxic loan packages if the only loans they had been making were to borrowers with sterling credit. So, they BANKED on mortgages they knew were going to default, and, TA-DA, quite a lot of them did.
That, my knuckle-dragging friend, was what was primarily responsible for the economic meltdown that started in '07 and reached crisis levels in September of '08, what caused the fall of Lehman Brothers and AIG, and made Georgie Porgie give the "too big to fail" banks a trillion dollars to bail them out.
But, of course, to you, who worships at the altar of the almighty corporation, banks and other financial institutions can do no wrong. It's the deadbeats they loaned money to, who obviously twisted the poor, powerless banks' arms to do so, who are responsible. After all, to you, there's no such thing as a victim, only someone who refuses to exercise "personal responsibility." Tell that to the police next time someone commits a crime on your azz. "Gee, officer, it wasn't the criminal's fault; I just forgot to exercise my personal responsibility."
Let me ask you something: in order to become a right-wing fundamentalist, like you are, do you have to voluntarily submit to an operation that removes both your brain and your heart, or can you forego the operation if you submit proof those organs are already missing?
The chimp training program let's some of it's most successful students loose on the rest of the population.
There is no such thing as Mortgage fraud. It is a ridiculous concept created by liberals to give more handouts to idiots.
If a man borrows money, a man must pay the money back. It is as simple as that. If someone is too freaking stupid to realize that their $32,000 per year job won't enable them afford a $2,000 per month mortgage then they get what they deserve.
Just WHO was it that pushed banks to lend money to all these unqualified minorities?
Chimp training? You spineless, bleeding heart liberals have no concept of self reliance. Every social ill and problem, in your eyes is the result of corporate greed and under regulation.
I don't give a flipping finger about FBA task forces. YOu have a damned Socialist President and a Marxist COngress. The FBI is going to do whatever they are instructed to do. ALL to help keep minority voters pulling the Democrat levers.
Here's something to think about, pinheads. There's no cookies left in the cookie jar and the American voter is not likely to put any more in the jar come the November mid terms.
We give, give, give and make every possible excuse for why minorities fail and nothing ever gets better for them. Why do you think that is?
It is because liberals have lowered the bar for minorities so low, they are incapable to lifing their own culture up.
Well, times are about to change. O-blow-me spent us into the poorhouse and has nothing to show for it.
There is nothing more to give to these defaulting idiots. Time for the handouts to stop!
I was given a variable, stated income loan by Washington Mutual. When I mentioned that the loan going variable might make the home unaffordable, the broken said, "Don't worry, you can refinance it later. I refinanced to a 5 year variable to provide some stability to the loan, again with Washington Mutual, now Chase.
Now that the loan is going to turn variable, the following has taken place:
1) There are no stated income loans anymore.
2) My property is now worth 35% less than the loan, so the loan to value ratio doesn't work.
3) Comparable loan values have fallen due to foreclosure and short sell properties.
4) The loan will turn variable soon, but the loan is 'toxic' as obviously over time, I will not be able to make the payments as mortgage rates must go up in the future.
5) My business is down due to the economy, and I do not qualify for a conventional loan.
I will be forced into foreclosure or bankruptcy in the future and become a statistic and a drain on the economy. The people who made the profits, (Washington Mutual) are long gone and I am here holding the mess that they handed to me.
Fact: I have never missed a payment, I have a credit score of 801, I have savings and Chase will not give me a new loan. In fact, Chase wants a non refundable fee of almost $400 to even process the loan, which they say I won't get anyway.
Other people in the US need loan help who are not broke, in default or were trying to work the system.
What does a person do in my situation?
The government is ready to help those who don't make payments, who have weak credit, etc. Where is the assistance from the banks for those of us who are credit worthy, but who can not get a loan due to the economic turn down for most small business owners and who didn't understand that a stated income loan was not forever?
There needs to be a bridge for this next swell of mortgages that are going toxic and will need some or any support. A hand out is not needed, but just an understanding that if we haven't missed a payment, we are probably still a good client for another loan.
Tommy: there's no such thing as mortgage fraud, and the FBI is part of your vast liberal conspiracy? You're living in a parallel universe, my friend. Actually, you remind me of no one more than Prince Mongo (and not on one of his lucid days)
You've given me no choice; I'm writing you off. You haven't defeated me, you've just given me a slap-to-the-forehead, what's-the-use realization. You're like a fighter who flails constantly and aimlessly, which is probably a good tactic if what you want to do is convince your opponents you're crazy and not worth messing with.
Congratulations; you've convinced me. Have fun flailing.
This is how banks take property from citizens, since the Chinese own the debt, the Chinese get our land at a bargain cost. This is payback for selling bad loans at a profit to them.
Soon they will ship all their undesirables here.
I get the impression that TV hasn't ever had a mortgage. He seems to be in unfamiliar territory.
Wall Street got rich off the sub prime market, and Tommy is whining about liberals. The liberals that control Wall Street I guess. The liberals that created the securitized mortgages and leveraged them 30 to 1. Those liberal vermin traders and brokers. Those limp special interest vermin that created the Fed Reserve in the first place.
Tommy isn't much of a big picture kind of guy. So when a bank over extends and borrows 30 to 1 against their assets, somehow that makes Tommy all warm and fuzzy inside. But when a guy loses his job at a place that had funding cut off by that same shitty bank, Tommy thinks he is a deadbeat.
Say it Tommy, come on, it is my favorite line.
You ma ma ma make me happy. There you go. Good Boy.
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