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

[justbroke]

The only good thing about it passing will be that there will be less foreclosures, so meanwhile the responsible person like myself, who understood that an ARM will adjust and your payment will increase and got a normal loan, will hopefully regain some value in my house.

There won't be fewer foreclosures. This is under the Bankruptcy code. This is only going to help those already contemplating to file Bankruptcy.

If your gonna bailout the crooked banks, and the crooked STATED INCOME borrowers that created the whole mess, then they need to bailout the RESPONSIBLE borrowers that have lost all their equity as well.

The Banks are crooked because they are opportunists and capitalist... just like most of us are.

You cannot have a bustling economy (as it was from 2000 to 2006) without lots of injection of cash into the system. Everyone was fat, dumb and happy when Banks were handing out $10K credit lines like Candy. I know, because I was eating that candy.

To now say Banks are scum, doesn't do any justice. The Congress and past, present and future administrations, will always look to Banks to distribute cash and to extend credit. Even the current incoming administration understands that the economy doesn't work without Banks lending money!

Everyone is mad about TARP but don't understand that it actually worked. Everyone is mad because they thought TARP was going to stop foreclosures. I, personally, never thought it could or would do that. Neither will the "modification" garbage that they'll add to the Bankruptcy Code (which will be so limiting, that it will be laughable).

However, most Americans will eat it up and think the Congress did a wonderful thing.

I need to relax.

[justbroke]

As it stands right now, this bill is garbage, sorry to say. Instead of doing all this stupid crap, they should just strike the wording in Sec 1322(b)(2) that states "other than a claim secured only by a security interest in real property that is the debtor's principal residence,"

They basically made no changes to the way it was the last time they tried to get it passed.

Even then, the actual number of people it would help is way less than 10% of the people in jeopardy of actually losing their homes.

[soapbox]

Yet, they get we Americans all excited that they -- Congress -- is actually doing something about the mess they -- Congress -- made and/or allowed to happen in the first place.

I'm tired of Congress and the current and incoming administration playing these games, making the people think that what they are going to do is going to save homes. Look no further than TARP; that was supposed to save homes too.

Regardless of what they say, this is just not going to work as it is.

[/soapbox]

Personally, I don't need this tool for my situation. I may be a bit apathetic about this, but you have to remember this. The only way to use this "program" is to actually file for Bankruptcy. That cuts out 90% of people right off the bat.

If the government wants to really stop foreclosures... setup a program to cramdown loans outside Bankruptcy. And, have the government either back the difference (to encourage Banks to continue loaning and have the right portfolio balance in order to lend) or buy the difference.

[SiftedLikeWheat]

The only good thing about it passing will be that there will be less foreclosures, so meanwhile the responsible person like myself, who understood that an ARM will adjust and your payment will increase and got a normal loan, will hopefully regain some value in my house.

If your gonna bailout the crooked banks, and the crooked STATED INCOME borrowers that created the whole mess, then they need to bailout the RESPONSIBLE borrowers that have lost all their equity as well.

But that would be in a perfect world, which, based on the signs of the times, we obviously do not even come close to that.

If I were in charge, I would reajust ALL mortgage loans to the current value of the home--maybe then the banks and the government would stop all the bad policy and bad loans that falsely inflated home prices in the first place.

By the way--please remember that A LOT of foreclosures occured because people had to move or lost a job! Everyone did not have an ARM. I bought an over-inflated home in CA (they were ALL overinflated) with 20%+ down and then got a second to make needed improvements. Then I got cancer, my husband left his high-pressure job due to the stress, etc. We moved to PA to be near his family AND OUR HOUSE NEVER SOLD. He knows two other people at his company who moved for jobs, their homes did not sell, and like us they lost EVERYTHING.
THEIR ARE MANY PEOPLE CAUGHT UP IN THIS WRETCHED ECONOMY, caused by government incompetence and corporate greed. Please lay off the little guy once and a while!

[HHM]

Here is the actual text of the bill as it relates to BK

(a) In General- Section 1322(b) of title 11, United States Code, is amended--

(1) in paragraph (10), by striking ‘and’ at the end;

(2) by redesignating paragraph (11) as paragraph (12); and

(3) by inserting after paragraph (10) the following:

‘(11) notwithstanding paragraph (2) and otherwise applicable nonbankruptcy law--

‘(A) modify an allowed secured claim for a debt incurred prior to the effective date of this paragraph secured by a nontraditional mortgage, or a subprime mortgage, and any lien subordinate to such claim, on the debtor’s principal residence, as described in subparagraph (B), if, after deduction from the debtor’s current monthly income of the expenses permitted for debtors described in section 1325(b)(3) of this title (other than amounts contractually due to creditors holding such allowed secured claims and additional payments necessary to maintain possession of that residence), the debtor has insufficient remaining income to retain possession of the residence by curing a default and maintaining payments while the case is pending, as provided under paragraph (5);

‘(B) provide for payment of such claim--

‘(i) in an amount equal to the amount of the allowed secured claim;

‘(ii) for a period that is the longer of 30 years (reduced by the period for which the loan has been outstanding) or the remaining term of such loan, beginning on the date of the order for relief under this chapter; and

‘(iii) at a rate of interest accruing after such date calculated at a fixed annual percentage rate, in an amount equal to the most recently published annual yield on conventional mortgages published by the Board of Governors of the Federal Reserve System, as of the applicable time set forth in the rules of the Board, plus a reasonable premium for risk; and

‘(C) if a claim has been modified to an amount below the original principal of the loan pursuant to subparagraph (B)(i) and the debtor’s principal residence is sold during the term of the plan, the holder of the claim shall be entitled to receive, in addition to the unpaid portion of the allowed secured claim, the net proceeds of the sale, or the amount of the holder’s allowed unsecured claim, whichever is less; and’.

First obvious CATCH...it only applies to non-traditional and subprime mortgages, second, if you sell the house in the future and the house increases in value, it appears the lender maintains a lien for the unsecured portion of their claim, also, it will only apply to loans that exist before the effective date of the law. It appears that this will add a layer to the income and expense calculation, if I am reading this correctly you only qualify for the write down if you cannot afford the current monthly payment.

So bottom line, as it is written right now, you can only modify the first mortgage if
1. the mortgage is sub-prime
2. You cannot afford the current monthly payment of your mortgage along with your other necessary expenses
3. The mortgage company maintains some sort of subordinate lien for the unsecured portion of their claim if you sell the house during your chapter 13 plan.

As it stands right now, this bill is garbage, sorry to say. Instead of doing all this stupid crap, they should just strike the wording in Sec 1322(b)(2) that states "other than a claim secured only by a security interest in real property that is the debtor's principal residence,"

[optimistic1]

The only good thing about it passing will be that there will be less foreclosures, so meanwhile the responsible person like myself, who understood that an ARM will adjust and your payment will increase and got a normal loan, will hopefully regain some value in my house.

If your gonna bailout the crooked banks, and the crooked STATED INCOME borrowers that created the whole mess, then they need to bailout the RESPONSIBLE borrowers that have lost all their equity as well.

But that would be in a perfect world, which, based on the signs of the times, we obviously do not even come close to that.

[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!

[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

[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]

No Worries.

[Scott50]

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

[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.

[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...

[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) ---->


************************************************** *****
GREED!
************************************************** *****

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

[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.

[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.