Another day, another bad idea from Congress

[Coronita]

Oh, when will the absurdity stop in Congress? Get knee deep in debt, file for bankruptcy, have bankruptcy judge reduce your mortgage payments for you. Nice.  Where do I sign up?

 

 

http://www.cnbc.com/id/21660625/for/cnbc

 

Mortgage Bill Could Spawn Bankruptcies

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WASHINGTON – Legislation proposed by House Democrats to help about half a million homeowners avoid foreclosure could also result in 500,000 additional personal bankruptcy filings over the next two years, some experts say.

The bill, introduced by Reps. Brad Miller of North Carolina and Linda Sanchez of California, would allow bankruptcy judges to change some mortgage terms on a borrower's primary residence, potentially reducing the interest rate and other features of a loan. Miller has said it would prevent up to 600,000 foreclosures.

But granting that power to federal bankruptcy judges would create a wave of filings, according to Sam Gerdano, executive director of the American Bankruptcy Institute in Alexandria, Va. Congress, he said, should consider the implications of that increase.

"It seems to me people should be asking pretty pointed questions on what the impact will be, particularly if we're talking about 500,000" new bankruptcy cases, he said. "There has never been that many in a year. Can courts handle that?"

Miller says the answer is yes. "The proposal came from bankruptcy court judges," he said in an interview. "This isn't something that just sprung from my brain."

Personal bankruptcy filings plummeted after Congress enacted tough new laws aimed at discouraging them in 2005. But the numbers have climbed steadily since. Between January and September, there were 575,735 such filings, a 44 percent increase from the same period in 2006, according to a database maintained by Jupiter eSources LLC.

Since 2005, control of Congress has shifted to Democrats, who are eager to reverse some provisions of bankruptcy law they regard as unfair to consumers and workers. That effort has gained momentum with the collapse of the subprime-mortgage market, and a rising rate of home foreclosures.

Mark Zandi, a chief economist of Moody's Economy.com, told a House Judiciary subcommittee last week that he expects 2 million home foreclosures over the next few years. Zandi said 500,000 of those could be prevented if Congress passes the Miller-Sanchez bill.

Currently, mortgage lenders can voluntarily modify the terms of a mortgage loan to help borrowers in bankruptcy afford payments for their primary home. But a recent Moody's survey of loan servicers found that "very little modification" had been performed, at least through this past summer, Zandi said. And under current law, a bankruptcy judge can't force the lender to modify the terms of a loan.

The Miller-Sanchez legislation would change that by giving bankruptcy judges the power to order loan modifications to help homeowners afford their mortgage payments. It gives judges broad discretion to order reductions in interest rates and other changes _ latitude that the banking industry says could make lenders nervous about providing mortgages to some types of borrowers.

The bill would mainly affect homeowners who file Chapter 13 bankruptcy petitions with the intent to repay their debt over time. Zandi has said it would not "significantly raise the cost of mortgage credit, disrupt secondary markets, or lead to substantial abuse."

But the ABI's Gerdano said the bill's supporters haven't contemplated the effects of a surge in bankruptcy filings. "Why wouldn't anyone file then if they are facing foreclosure?" Gerdano said. "I'm sure most people would consider it, and do it if legislation is passed."

The ABI represents more than 11,000 bankruptcy lawyers, accountants and restructuring professionals. Gerdano said Chapter 13 filings could "spike to record levels" if the Miller-Sanchez bill became law.

That, he said, could increase business for home appraisers and Chapter 13 attorneys. But Gerdano said the effect could be broader than that.

"Five hundred thousand of anything is going to have some impact," Gerdano said. "Maybe the earth will still spin, but no one is doing economic models which say, 'Here is the impact.'"

Although it faces opposition from the banking industry, the Miller-Sanchez bill is making its way through the House of Representatives. By a 5-4 vote, a House Judiciary subcommittee approved the bill last month. The House Judiciary Committee could vote on the bill as early as Wednesday.

 

[kev374]

A mortgage is a binding contract between a lender and the borrower, the government has no business intefering with these matters unless there was some criminal activity involved.

What have we become now a POLICE STATE? WELFARE STATE??

[kev374]

A mortgage is a binding contract between a lender and the borrower, the government has no business intefering with these matters unless there was some criminal activity involved.

What have we become now a POLICE STATE? WELFARE STATE??

[kev374]

A mortgage is a binding contract between a lender and the borrower, the government has no business intefering with these matters unless there was some criminal activity involved.

What have we become now a POLICE STATE? WELFARE STATE??

[kev374]

A mortgage is a binding contract between a lender and the borrower, the government has no business intefering with these matters unless there was some criminal activity involved.

What have we become now a POLICE STATE? WELFARE STATE??

[SD Realtor]

I doubt that any of us are surprised by this. Look for more zany antics monday – friday on cspan every day that congress is in session!

SD Realtor

[SD Realtor]

I doubt that any of us are surprised by this. Look for more zany antics monday – friday on cspan every day that congress is in session!

SD Realtor

[SD Realtor]

I doubt that any of us are surprised by this. Look for more zany antics monday – friday on cspan every day that congress is in session!

SD Realtor

[SD Realtor]

I doubt that any of us are surprised by this. Look for more zany antics monday – friday on cspan every day that congress is in session!

SD Realtor

[cr]

This brings up several questions:

– Is this more rhetoric from the empty-head congress to appease the political issues of the moment? Wasn’t that what it was last time? Afterall, there hasn’t been much in the way of bailouts from government, (excluding the FEDs bank bailouts)

– Aren’t the majority of people, as the bulls point to as housing strength, paying their mortgages on times, and therefor against such proposals?

– And even if all these bailouts did happen, would it stop the 50% correction housing needs?

Someone should ask these people how they plan for the next wave of homeowners to be able to buy houses if they artificially prop up inflated prices.

[cr]

This brings up several questions:

– Is this more rhetoric from the empty-head congress to appease the political issues of the moment? Wasn’t that what it was last time? Afterall, there hasn’t been much in the way of bailouts from government, (excluding the FEDs bank bailouts)

– Aren’t the majority of people, as the bulls point to as housing strength, paying their mortgages on times, and therefor against such proposals?

– And even if all these bailouts did happen, would it stop the 50% correction housing needs?

Someone should ask these people how they plan for the next wave of homeowners to be able to buy houses if they artificially prop up inflated prices.

[cr]

This brings up several questions:

– Is this more rhetoric from the empty-head congress to appease the political issues of the moment? Wasn’t that what it was last time? Afterall, there hasn’t been much in the way of bailouts from government, (excluding the FEDs bank bailouts)

– Aren’t the majority of people, as the bulls point to as housing strength, paying their mortgages on times, and therefor against such proposals?

– And even if all these bailouts did happen, would it stop the 50% correction housing needs?

Someone should ask these people how they plan for the next wave of homeowners to be able to buy houses if they artificially prop up inflated prices.

[cr]

This brings up several questions:

– Is this more rhetoric from the empty-head congress to appease the political issues of the moment? Wasn’t that what it was last time? Afterall, there hasn’t been much in the way of bailouts from government, (excluding the FEDs bank bailouts)

– Aren’t the majority of people, as the bulls point to as housing strength, paying their mortgages on times, and therefor against such proposals?

– And even if all these bailouts did happen, would it stop the 50% correction housing needs?

Someone should ask these people how they plan for the next wave of homeowners to be able to buy houses if they artificially prop up inflated prices.

[Author]

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