*~*This would be awesome for HOMEOWNERS *~*

[simon2020]

If you, like I am contemplating filing for Chapter 13 very soon, we pray that the Senate passes this in the new OBAMA Stimulus Package that will be on the table this week and through Obama's inaugaration on 1/20/09.

I hope, I hope, I hope it passes!

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Stimulus Package to Include Cram-Downs.

House Democrats are likely to unveil legislation on bankruptcy reform that allow cram-downs Tuesday morning, Reuters reported; Rep. Brad Miller (D-NC), a member of the House Financial Services Committee, is set to introduce the bankruptcy reform bill, the news agency said. House Democrats are counting on the support of Sen. Richard Durbin (D-IL), who in November re-introduced similar legislation to reform bankruptcy law in order to allow for cram-downs.

Democrats, including Durbin in particular, have long advocated allowing judges to modify principal amounts of mortgages on primary residences in Chapter 13 bankruptcy cases filed by debtors; currently, such modifications are precluded by law. President-elect Barack Obama, however, has said repeatedly that his administration will make passing cram-down legislation a priority when he takes office in January.

[optimistic1]

Wow, that would be awesome considering I am upside down over 100,000 on my worthless home.

But, I dont understand, how exactly does that work? Does this mean, if I get a cram down, I must pay the market value of my home within a 5 year period? Or after the 5 years I no longer owe the underwater balance?

And with my luck, they will probably pass it, but there will be a clause in the law for FHA loans.

From what I have read, this proposal seems very promising, but I am curious of the details.

[Flamingo]

If it does ever pass it could take years to pass, just like the new law change that took place in 2005...we filed in early 2002 and our attorney mentioned it to us and that it was on hold and would still take a while to pass. Secondly, there will surely be qualifications to ensure the mortgage is affordable to the filers even after any cramming, and, Thirdly, there will be such a revolt among regular homeowners who struggle holding two or more jobs to make their mortgage payments and put food on the table and will wonder why there are not options for them also. They could be upside down also but realize that if they let things go, they too can take advantage of filing a Chapter 13. I don't think this will pass and if it does, there will be many exceptions and qualifications which will probably exclude a majority of filers.

[simon2020]

Here's more --- and I DO think it will pass this time around. Flamingo, this will be part of the STIMULUS PACKAGE and NOT a separate bill.

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A new law that would allow bankruptcy judges to modify the terms of mortgages on primary residences seems a certainty now, according to a Reuters report.

Democrats in both the House and Senate are reportedly preparing a plan to introduce such legislation that should get president-elect Barack Obama’s blessing once it reaches his desk.

Similar bills were strongly opposed by industry groups like the Mortgage Bankers Association and President Bush, and were eventually shot down last year before they had the opportunity to become law.

Opponents of such bills have argued that interest rates on home loans could jump one-and-a-half to two percentage points higher as a result, and would further restrict already tight lending conditions.

The MBA in particular has argued that a so-called “bankruptcy cram down” would make it more difficult for lenders to assess property values, leading to higher down payment requirements and closing costs.

Proponents of the bill, mainly consumer advocacy groups, believe it could help distressed homeowners work more effectively with their lenders to find viable solutions other than foreclosure.

Though a cram down bill looks extremely likely to pass time around, it will surely be limited in scope, possibly only available to those with “subprime loans,” and probably only on a temporary basis.

Interestingly, last month the now quite desperate National Association of Homebuilders flip-flopped on their mortgage cram down stance, with chief executive Jerry Howard now supporting a temporary provision.

Current law allows bankruptcy judges to modify terms and reduce principal balances on second homes, but not primary residences.

[optimistic1]

Though a cram down bill looks extremely likely to pass time around, it will surely be limited in scope, possibly only available to those with “subprime loans,” and probably only on a temporary basis.

Of course, lets only bailout the irresponsible people that didn't understand that their payment changes after 3 years. How ridiculous. Where is my bailout and my cram down package? I saved for a down payment, got a 30 year fixed rate, and participated in a government bond program. Meanwhile people were getting mortgages with stated income. Those people deserve to have their stuff thrown out of their house including themselves. They are the reason my house is worth nothing, and so are the banks that wrote and invested in those loans, and then were rewarded by Bush and received billions of dollars. That is the problem, because if my value never returns for my house, I will walk away and buy again later in life, and many are already doing just that, walking away.

I gotta take a walk now, that phrase above simply disgusts me.

[Flamingo]

Of course, lets only bailout the irresponsible people that didn't understand that their payment changes after 3 years. How ridiculous. Where is my bailout and my cram down package? I saved for a down payment, got a 30 year fixed rate, and participated in a government bond program. Meanwhile people were getting mortgages with stated income. Those people deserve to have their stuff thrown out of their house including themselves. They are the reason my house is worth nothing, and so are the banks that wrote and invested in those loans, and then were rewarded by Bush and received billions of dollars. That is the problem, because if my value never returns for my house, I will walk away and buy again later in life, and many are already doing just that, walking away.

You should see the Letters to the Editor over the past few months about this from the regular Joe Plumbers and Joe Six Packs out there working hard, have the average non-subprime mortgage and/or home equityline and doing it right wondering who is going to bail them out and help with their mortgage payments? It's a disaster waiting to happen and I would not want to be in politics right now.

[optimistic1]

I have no problem paying what I committed myself to for 30 years, but the value is totally lost. I wanted to move up one day into something better, but that dream is crushed, unless I win the lottery, or pay my mortgage with double principal.

Meanwhile, in the twilight zone.

Lets bail out the schmucks that borrowed more than they could afford, because it was interest only for three years.

Makes me want to vomit.

[simon2020]

We are ALL in this sinking ship - like it or not

optimistic1 - sorry to hear about your situation. I do understand how you feel. You have a right to feel slighted. Just keep in mind, EVERYONE and I mean EVERYONE including the infamous MADOFF or "Made-Off" with my Billions guy, the US Goverment, every state govt., mortgatge companies, credit card companies, finance companies, hedge funds companies, the list goes on and on and on are guilty of: (spell it with me) ---->


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GREED!
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Unfortunately, you have been dragged down the Titanic with everyone else, guilty or not guilty.

[Flamingo]

There will probably be something tacked on that at the end of the Chapter 13, the crammed amount (temporarily crammed during the 13) will have to be paid back either partially during the remainder of the term or repaid when the home sells and there is profit (similar to the packages out there now). Watch...

[justbroke]

There will probably be something tacked on that at the end of the Chapter 13, the crammed amount (temporarily crammed during the 13) will have to be paid back either partially during the remainder of the term or repaid when the home sells and there is profit (similar to the packages out there now). Watch...

Yeah, I bet the lien still holds at the original note cost.

[Scott50]

Simon2020- just a suggestion- go easy on the different fonts and colors in your posts... we get the point...

[simon2020]

No Worries.

[bpn2009]

Congress is the one that started this whole mess changing the loan rules in the late '90s and forcing Freddie; Fannie & FHA to make riskier loans. Then wall street greed took over, bundled these loans into investment schemes hedged by commodities. After the housing bubble burst, the commodities bubble popped, people lost money now economy in the crapper.

[simon2020]

***Industry Balks at Bankruptcy Bill***

.
Does Citigroup Stand Alone? Industry Balks at Bankruptcy Billthe bill could hurt its competitors more than Citigroup.
As it stands, Durbin's bill (SB 61) would essentially give judges the authority to rewrite the terms of a home mortgage -- a so-called "cramdown," something possible already for every other kind of debt, mortgages on vacation homes and any real-estate other than a primary residence. It would also extend Truth in Lending Act protections to bankruptcy court, meaning predatory loans -- made in violation of TILA -- would be wiped out.

To get Citigroup's support, Durbin agreed to three minor modifications. First, it would apply only to mortgages in existence when the bill passes, not future loans; lenders have argued that applying it prospectively would drive up the cost of borrowing for all homebuyers. Second, to qualify for a modification, homeowners would have to contact their lender at least 10 days before filing or bankruptcy, to give it a chance to offer a voluntary workout. And minor violations of TILA wouldn't wipe out a debt, but would instead incur a fine, bringing it into line with how the statute already operates outside bankruptcy court.

That's not enough for much of the industry. The Financial Services Roundtable, a trade group that represents a hundred banks, insurers and other big institutions, put out a statement opposing the compromise, calling the revised bill "a first step," but "still far too broad" and "a serious risk to the mortgage markets."

The industry's main objections: the bankruptcy-modification provisions would apply to all existing mortgages, even million-dollar homes or those where the homeowner hasn't fallen behind on payments, and there's no time-limit, meaning lenders could still be dealing with bankruptcy modifications for current mortgages 30 years from now. Moreover, that truth-in-lending provision means a mortgage can be wiped out. "You get that house for free," FSR's Scott Talbott said in an interview.

Supporters dismiss the industry's complaints. Unless they're at risk of foreclosure, most homeowners wouldn't qualify for bankruptcy, notes one Democratic Senate aide, and the truth-in-lending provision just mirrors the penalty outside bankruptcy court for abusive lending practices. As for putting a time-limit on seeking a modification in bankruptcy, "there's no good policy justification for that at all," the aide says.

So given the bulk of the industry's opposition, why does Citigroup support the bill? In a letter to lawmakers, Citi CEO Vikram Pandit says it "will serve as an additional tool" to help homeowners at risk of foreclosure. "Given today's exception economic environment, we support its swift passage," he wrote.

But some see a more sinister motive: Changing the bankruptcy law could force lenders and mortgage-backed security holders to take write-downs, under accounting rules that require companies to recognize hits to asset values once they become likely. (Since some homeowners will surely file for bankruptcy, and then receive mortgage modifications under the new law, some losses are likely.)

But the federal government has twice come to Citi's aid, plowing $45 billion into the company to keep it stable. The second time, the government guaranteed the company against big losses on $306 billion of real-estate loans and securities. (See the Treasury's press release and the term sheet.)


Source: http://www.businessweek.com/election...s+%2B+analysis

[SiftedLikeWheat]

Let me see...

I borrow money for a house. The bank agrees to lend me the money. For reasons beyond my control (say, illness, job loss, employer move, etc.), I can no longer pay. Contract says, bank gets house back. House has fallen in value by 50%. Bank is mad that it has lost money. Since business believes "risk" should now be borne by government (the taxpayers), they cry to the government to make up the difference. I go bankrupt. They get bailed out with my tax money.

So I am supposed to begrudge all those "deadbeats" that took out bad loans!!!???

There is nothing any more that will help me. My bailout is BK and I accept that. But I do not begrudge help for others hurting out there.

Most people were sunk in the Titanic without guilt. And even the so-called deadbeats were SOLD the loans by corrupt banks/lender, with government backing and support.

I hope it passes and too bad for those who think they are not getting their handout, too!