Posted on 01/29/2006 2:17:44 PM PST by Uncle Sham
Don't leave us to foreclosure Sunday, January 29, 2006 Here in a community full of ruined homes, it takes no imagination to predict an epidemic of foreclosures that could devastate families, cripple the recovery of greater New Orleans and strain the nation's economy. If your flood insurance payout isn't nearly enough to cover your mortgage, you wonder if you'll have to abandon your unlivable home. If you look down the block at a dozen other damaged houses and know that your neighbors are in the same bind, you understand the fear of losing your neighborhood to blight. If you travel daily past block after block of empty, flood-marked houses, you understand how large the hole in our economy could become. This explains why U.S. Rep. Richard Baker is not giving up on his proposal for a federally backed buyout of flooded-out homeowners and small business owners. He wants Congress to create a corporation that would release Hurricane Katrina's victims from their mortgages, sell bundles of property to developers and help get storm-ravaged land back into commerce.
(Excerpt) Read more at nola.com ...
Common misconception. The recent amendments to the bankruptcy code (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)) do NOT get rid of Chapter 7 discharges.
In fact, it may even be easier. Time will tell, but that's what the consumer bankruptcy lawyers are saying.
It does throw a couple of procedural roadblocks in the way, but those are easily surmounted.
The new law basically says you must try a repayment plan or "consumer credit counseling" first before you can file Chapter 7. And-if you make more than the median income for your area you generally can't file a 7, but even in those cases I think it can be done in these types of circumstances.
"You have to come up with a repayment plan when you file Chapter 7"? Tsk.
Repayment plan = Chapter 13. Yes, you have to file Chapter 13 if you make too much money and own too much property to qualify for Chapter 7.
I don't believe that any New Orleanian who was wiped out by Katrinia is going to have any problem qualifying for Chapter 7.
The American Bankruptcy Institute has estimated that 90-95% of the people who were able to file Chapter 7 before the law was amended will still be able to do so under the new law.
Correct. Now take that thought a few steps further.
Let's assume you're the mortgage company. You have to pay lawyers to foreclose on the property, so that's good money out of your pocket.
You didn't get the mortgage payment, so that's money you loaned and never got back.
And now you own a flooded wreck that you can't sell.
Multiply that times 300,000.
Now what do you do?
This is true. Only this time we're talking about a couple hundred thousand pieces of depressed property all coming on the market at once, and no buyers in sight.
Smart people are fixing up and selling for what they can get.
The rest of them are just catching on to the fact that they're stuck with no Plan B.
Maybe you're right, maybe it's just a blip that won't mean anything except to the people it affects. I assume the Congressional Budget Office number crunchers are chewing through the numbers as we speak, and have their green eyeshades on and are scrutinzing the bottom line.
Because that's what we're really talking about here, the bottom line. All the yelling about "serves them right" is 2005's old news. It's a new year, out with the old, in with the new.
If you make more than the median income in your area you have to go to "means testing," but then you get to deduct all your expenses so for most people it's not an issue. Just makes it harder to file.
Nobody I know has had many of the new cases. I just have three -- but I don't do bankrupcty exclusively. All three qualify, easily.
Got a better idea - don't build your home in a coastal area below sea level.
New Orleans should not be rebuilt. The Port of New Orleans is a strategic necessity, but we can do without the rest of it.
But I'm going to miss Mother's and Brunig's.
I assume you mean that the flooded areas should not be rebuilt. Because the areas on high ground are fine.
If the Grand Poobahs who decide these things decide not to rebuild the rest of New Orleans, who's going to compensate the property owners? No one can be deprived of their property without just compensation, remember?
We would not "deprive" them of their property. We're just wouldn't pay to rebuild it or protect their location with flood control. They want to rebuild and put in flood control - fine.
Well, I don't know who you mean by "we." Since you don't live there I assume by "we" you mean the American taxpayers.
The point of the Baker Plan isn't about rebuilding in flood zones, per se. It's about what to do with all the destroyed property.
Baker's professional life was spent in the mortgage industry. He's thinking about all the mortgage companies that are going to be stuck with non-performing mortgages and properties they can't sell.
As I keep explaining to people, in case you don't know, the American taxpayer guarantees FHA and VA loans, through Fannie Mae and Freddie Mac.
So, his point is that we can pay 60 cents on the dollar now, buy up these properties and decide what to do with them in an orderly way, or pay 100 cents on the dollar plus legal fees later.
I know there will be some people hurt very badly. I feel sorry for them and I am glad i am not one of them. Some will make out like bandits by buying dirt cheap and redeveloping. Even that is highly speculative.
The future value of New Orleans property will depend on what the federal government decides to do about the levees, etc. Whatever they decide will take time. As a result, I don't expect to see a lot of rebuilding soon, mostly just cleaning up and fixing up.
Those who were in the blighted areas, the ones also most prone to flooding, are not likely to rebuild. Most of that was rental property anyway, at least I think it was but it had been there a long time. It didn't start blighted, just ended up that way.
Remember, even without a hurricane, with just a heavy rain which occurs pretty often down there, they are totally dependent on the pumps. It floods often as the pumps try to keep up. The drainage systems are also old and many are probably undersized.
I am glad it is not my problem to solve.
BTW - according to Tom Fitzmorris, "Mr. Food," Mother's has reopened.
http://www.nomenu.com/RestaurantsOpen.html
Brunings -- well, as you know, the lakefront took a gigantic hit. But Deanies, in Bucktown, is open! I ate there two weeks ago on my first trip back since Katrina. Place was jam packed. Doesn't have the view, but the food's about the same.
Put that way, it sounds good.
Still, if I could get away with it, I'd tell the mortgage companies "excrement happens."
Eventually most, if not all, of the property in the flood zones is going to be scraped clean and allowed to return to wetlands. That's my prediction.
If the EPA restrictions on building on wetlands had been in effect back then, they never could have built on these properties to begin with.
Eventually the American taxpayer is going to foot the bill, and buy it all up.
It's just a question of "when" and "how much."
She is a snob and a social liberal who loathes Southerners.
She has been on our radar for years.
Looks like her true colors have been exposed to a larger audience.
Still, if I could get away with it, I'd tell the mortgage companies "excrement happens."
Unfortunately, when bad things happen to mortgage companies, and banks, the pain spreads to the rest of us.
Here's Baker talking about the plan.
http://www.bayoubuzz.com/articles.aspx?aid=5948
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