2009-01-28 — housingwire.com
"The House Judiciary Committee on Tuesday approved a measure for so-called “cram-down” provisions that would allow bankruptcy judges to change the terms of a mortgage by reducing the interest rate, extending the life or lowering the principal or loan balance as part of a bankruptcy debt restructuring plan. The bill passed the panel’s approval 21 to 15, according to a report by the Washington Post Wednesday."
michaelblomquist at 16:46 2009-01-28 said:This ought to be good. Leave it to Congress and the lenders to totally screw things up. This makes little sense to address the magnitude of foreclosures and will TOTALLY jam up the bankruptcy courts. Borrowers could have their foreclosure sales stayed for 2 years before they get to the "cram down stage" living rent free on the taxpayers dime. Here is a typical scenario http://www.michaelblomquist.com/casespending/07BK04106/Document24.pdf What's the over/under on the number of people currently in foreclosure who committed fraud when getting their loan 60%? If this was not so pathetic it would be hilarious. Permalink
kindandgentlejd at 10:16 2009-01-29 said:
This ought to be good. Leave it to Congress and the lenders to totally screw things up. This makes little sense to address the magnitude of foreclosures and will TOTALLY jam up the bankruptcy courts. Borrowers could have their foreclosure sales stayed for 2 years before they get to the "cram down stage" living rent free on the taxpayers dime. Here is a typical scenario http://www.michaelblomquist.com/casespending/07BK04106/Document24.pdf What's the over/under on the number of people currently in foreclosure who committed fraud when getting their loan 60%? If this was not so pathetic it would be hilarious.I completely disagree. I think the opposition to this bill is a stellar reminder to taxpayers that lenders want it only one way. They want all of the support and bailout but do not want to pay any price for their own failed practices. I argue that the cramdown has already taken place... on paper. The total mean spiritness of the lending industry is to force people into foreclosure and be left out in the cold instead of creating an alternative, bk cramdowns that actually benefit the lender as well as the consumer. Why? If they foreclose, the holding costs and commissions they have to pay to liquidate the REO will be much greater than agreeing to the cramdown to market value. I just dont get it. A cramdown is a much better alternative to foreclosure for everyone. As for the fraud, lenders created criteria and purposely looked the other way because huge profits were to their benefit at the time. If it is fraud by borrowers, which I think is only in a small percentage of the cases, the lenders have unclean hands in that fraud and should not be entitled to any relief. Both parties, lenders and borrowers used EXTREMELY POOR JUDGMENT. So, you get what you get... a tanked economy. Banks got their handout, it is now time for consumers to get theirs. Ah, but as usual, the banks want it both ways... handouts and jammed the other guy. Permalink
michaelblomquist at 12:10 2009-01-29 said:The purpose of my post was not to berate borrowers; it was to illustrate another FAILED attempt to stabilize the housing market. Once this BS plan is implemented it will take another 6-12 months to realize that it won't work. Meanwhile people will be losing their homes, turning to crime, etc. There are much better, less expensive ways with less moral hazard to keep criminals/borrowers in their homes (temporarily) than cram downs. I don't think criminal is too harsh of a word, but compared to those who were pushing fraud and inflated properties it is like comparing shop lifters to rapists. If I were to rate the lenders and borrowers on a scale of evil and culpability in this crisis it would be 9 for the lenders and a 5 for the borrowers. Many borrowers were not buyers, but those who believed they were somehow entitled to equity that was based on rampant fraud. Their ability to repay that debt was not considered. We should not exclude investment banks, credit rating agencies, loan originators, realtors, etc. from this catastrophe who all also get 9's. Again I stand by my numbers at least 60% of all loans originated from 2004-2007 (4 years) were done under fraudulent terms. Once the banks and courts start excluding people there will be very few left to benefit. Modifying loans for people who committed fraud will create anarchy. Financially there is NO solution to this crisis other than letting prices fall to sustainable levels. Unfortunately, we have NO idea where that is because we have been jumping from bubble to bubble and our GDP is a fairytale. Unless our representatives wake up to this fact we will go on defrauding foreign investors who will eventually want their money and WWIII will begin. My point is that if there is a grievance those borrowers who committed fraud or recklessly purchased at the top had an agent who was legally required to act in their best interest; go after them and leave tax payers alone. The ONLY people remotely entitled to tax payer assistance will be the Pensioners who should have been better protected by our government and the NRSROs. The investments they were purchasing via corrupt or inept money managers were NOT investment grade and now their life savings and pensions are at risk because of all of the other fraudsters. At the foundation of our Nation's success is the court system. Bush should have been impeached years ago and we would have probably had regulators who would have been on top of this instead of suing Spitzer and other AGs for trying to stop the lenders. America has gotten to lazy and our government too corrupt. Until everyone wakes up and demands justice we are destined to fail. Justice is NOT a cram down nor are cram downs viable solutions Permalink
kindandgentlejd at 13:16 2009-01-29 said:Unfortunately, I think that I decided that I have come to the conclusion that I am open to most anything. I support the cramdowns as I said, but I am certainly open to alternatives. As far as letting things take the natural course, I am all for that too. Dont do any bailouts and let the water pool to the lowest spot. Permalink
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