Mortgage Cram-Downs Stripped Out of Rescue Bill

[Robbien]

Source: WSJ

Legislation to give bankruptcy judges the power to reduce home mortgage debt–by “cramming down” the principal–doesn’t appear to have enough votes and will be stripped out of a broader housing bill in the Senate.

The cram-down effort is a major plank of President Barack Obama’s housing rescue, which also offers financial incentives to mortgage servicers to modify loans and allows some homeowners with little to no equity to refinance.

The cram-down measure already passed the House of Representatives as part of the housing rescue. But it faced heavy opposition from the banking industry, and there were signals last week that Senate leaders might discard the measure from the housing bill.

Monday, Dow Jones reported that the Senate will instead vote on the cram-down legislation as an amendment to the rescue bill, with all Republicans opposing the provision together with at least a couple of Democrats.

Read more: http://blogs.wsj.com/developments/2009/04/28/mortgage-cram-downs-stripped-out-of-rescue-bill/

---

Senator "I don't have the votes" Reid strikes again.

[Junkdrawer]

1. Sigh...the ONE thing in the bill for the little guy...

The "NO, WE WANT ALL THE MONEY" plutocrats strike again.

[Robbien]

5. I often wonder if Reid's reluctance to seating Franken

is on purpose to keep using the excuse "I don't have the votes". Reid is in the pockets of the lobbyists AND the GOP. Having 60 Dems (with Specter and Franken) is probably Reid's worst nightmare.

[Junkdrawer]

6. I've had that thought too. n/t

[digidigido]

9. Do you really think Spector would vote for this? He's at best a Blue Dog

[No Elephants]

18. If he wants support from Obama and other Dems in 2010, he will be on his best behavior until

then. What he does after he become the Democratic incumbent is anyone's guess. I think he will then vote exactly as he does now--even less of a DINO than the rest of the DINO's, except maybe on social issues.

[No Elephants]

17. Wow. You are even more suspicious than I. But probably correct. I have asked my

Senators to replace Reid as Majority Leader. I wish that all Democrats who have Democratic Senators would do the same. If enough of us contact our Senators, maybe we can scare them into replacing him. Because, he must serve their purposes, too, or they would have replaced him already.

I hate that our government is run by and for them that has, but, bottom line, we have more votes. We have to learn to use our power.

[closeupready]

25. I'm beginning to think this is exactly it.

n/t

[prolesunited]

2. Of course

that privilege should be reserved for the rich and their second and third homes. The peasants would only abuse it.

[villager]

3. this won't change until the newly homeless get together and "visit" all their "representatives"

at their own homes and offices....

[notadmblnd]

4. You know what drives me crazy about this housing thing.....

that the banks are unwilling (at least mine is) to work with the homeowner, but they will foreclose and sell the property for a fraction of the price that the homeowners owe. I contacted my bank in Feb and told them I was going to have problems come April. I sent them the paperwork, not once, but twice. Do you think anyone at the mtg company has picked up the phone to call me? Hell no. I suspect I'll get a call come May 15th and they don't have their payment though.

I'm not asking my bank to come down on the principle (even though I've been in the home long enough to have the principal amount paid back. All I want them to do is reduce my interest rate from 12% to what it the rate is now so my payment will go lower and I can afford to stay here. But as things are now, I'm going to let them foreclose, they won't get 40,000 for this place when they sell it. I owe 124,000. Now is that insane or what?

[LibertyLover]

7. That is my experience too

The holder of my mortgage totally blew me off everytime I tried to renegotiate. I wasn't even trying for a cram down even though I'm underwater, just a reduction in the monthly payment. Now my house is in foreclosure in a market where nothing is selling and if they get 15 cents on the dollar they will be lucky. My bankruptcy attorney is useless in terms of coming up with solutions. I have contacted the Maryland pro bono attorneys to see if they can do anything, but I'm not sanguine and we are packing the valuables and getting them out of the house now. One of my big hopes was this bill and now it's not going to happen. Damned plutocrats with their "fuck the little guy" attitude. They won't be happy until we are back to real legal serfdom and not just de facto.

[notadmblnd]

8. I went to a foreclosure prevention specialist

he's been about as helpful as tits on a bull. His first words to me was "I was was hoping you wouldn't show up."

I've decided I'm taking my life savings and paying cash for one of the cheap foreclosed homes in the next town. I'm not spending it trying to save this one. Fuck the bank!

[closeupready]

27. Yes, unfortunately, it does get to that point "fuck the banks".

they really can be bloodsuckers.

[xiamiam]

10. im in a similar situation...perhaps we could have a forum here...i was hoping that this bill would

pass..what truly irritates me is that the banks are lobbying so hard against this..probably with tarp money...nouriel roubini suggests that this is the only way out of the mess...i agree...there are 14 million vacant homes...millions more on the way...and the banks are lobbying to get more????there is an element of common sense missing here...bankrupcy judges are allowed to cram down investment properties but not personal residences...this bill should have been passed already..

[Sam1]

13. Tax consequences.

If you go through the foreclosure and the house has a 40,000 market value then you will most likely get a 1099 form in the mail showing income of 84,000 dollars, the difference between the amount of debt forgiven in the foreclosure and the market value of the house. This can be avoided by bankruptcy or insolvency. You need to check with your tax person about it.

[notadmblnd]

14. So ah.. what would the tax be on 84,000?

5, 6 grand? I'll make payment arrangements.:shrug: My sister had a manufactured home repossessed and never got a 1099. I'll take my chances I guess.:shrug:

[WriteDown]

23. More like 20K. nt

[Hawkowl]

28. They want you to default

It has become quite apparent to me that banks actually are forcing people into default on all types of debt so that they can collect on the default insurance they have purchased, from among others, AIG.

There is no incentive to work things out because the bank is going to get paid anyway, and the bank gets its money immediately when you default--from the insurance company. It also gets to keep your house to sell later.

When people finally realize we bailed out AIG to INCREASE FORECLOSURES, then we finally will start to reform our financial system. By guaranteeing the credit default swaps (CDS's), we have sown the seeds of the destruction of the worlds entire economy.

[xiamiam]

11. Durbin makes some very good points here

http://www.huffingtonpost.com/2009/04/27/bankruptcy-bill-watered-d_n_191998.html

a couple paragraphs:

It is "hard to imagine that today the mortgage bankers would have clout in this chamber but they do," said Durbin. "They have a lot of friends still here. They're still big players on the American political scene and they have said to their friends, stay away from this legislation."

snip
"The groups that are leading the charge against me on this are familiar names on Capitol Hill. The Mortgage Bankers Association, the people who brought us this wonderful subprime mortgage crisis," said Durbin, adding, "the Financial Services Roundtable, the biggest names in financial services in this nation, the ones that have had their hands out for federal money, opposed this idea of helping people facing foreclosure. And the American Bankers Association. What a disappointment. What a disappointment that a great association like that, representing so many good banks, would not even sit down at the table to discuss this provision. It's a source of great disappointment to me because as a congressman and senator I work with them on so many issues."

The ABA left the negotiating table several weeks ago and has been furiously lobbying against the bill.

"I've never found them more unyielding and unreasonable than on this issue. They say, 'Don't worry about it, Senator. We're experts, we're going to handle it. Don't tell us what we need to do.' Well, many of those same banks are the first in line when it comes to federal money," said Durbin.

more at link..like who is going to win this..the banks or the american consumers?

[Piewhacket]

12. Oh, they didn't like "Cram Down"? Fine, bring in the "Cram Up" provision.

[Laelth]

15. This sux. n/t

:mad:

:dem:

-Laelth

[w4rma]

16. Then screw the bill. That part of the bill is too important to lose. (nt)

[melm00se]

19. the question that I have on this

is that since the U.S. Supreme Court has interpreted Chapter 13 of the Bankruptcy Code to preclude modification of a mortgage loan secured, in whole or in part, solely by the debtor's primary residence (Nobelman vs. American Savings Bank) would the proposed provision have passed Constitutional muster?

[Zuiderelle]

20. Lovely, the most helpful part of the bill is lost now.

[No Elephants]

21. Will Obama veto? (If Democrats keep acting just like Republicans, I have to reassess.)

[Doctor_J]

22. The lobbying industry is the last impediment between us and democracy

Hate Radio has been neutralized. Once the lobbyists have been kicked to the curb, the democracy of the Founders will be within reach.

[Zuiderelle]

24. Now that I read it again, it seems to refer to only where bankruptcy judges order the cram-down.

So, it doesn't take away the provisions that were in there for homeowners who are not involved in a bankruptcy but who have no equity, to refinance at a lower percentage rate... I hope.

Either way, it's pretty horrible to take away the one thing that would help the very at-risk people they are claiming to want to help. Can't get more at-risk than being involved in a bankruptcy. This could have helped many people avoid bankruptcy all together.

[Vidar]

26. Save the Banks! Death to the Peasants! Let them eat cake!

[ethe9820]

29. Mortgage Holiday

I believe the answer is at www.saveoureconomy.com. It is a common sense stimulus plan that will immediately help the housing market. And to answer the question "what about the renters?" Most Renters, will also get relief if their Landlord Opt's into the Plan as most will. Also the Banks will be saved by this Plan because they receive a guaranteed 6% interest payment on all of their debt instead of massive defaults, foreclosures, & delinquincies. They will also be able to Refinance all of the existing debt and the mortgage lenders will have a Booming business and many jobs created in the Process, since it is mostly about creating JOBS!