Posted on 01/25/2009 8:48:57 PM PST by businessprofessor
Most congressional Democrats say the quickest way to save homeowners like Troy Butler of Saginaw, Mich., is to let them declare bankruptcy and allow judges to dictate new mortgage terms.
Easy, except the lenders that would absorb the pain — and lose control of any deals to ease the terms — do not want to get dragged into bankruptcy court by millions of overextended borrowers.
(Excerpt) Read more at msnbc.msn.com ...
how do judges get to call mortgages?
Default or bankruptcy shouldn’t allow the defaulting party to continue to occupy the property under any conditions!
The judge wasn’t a participant in the original transaction. If no laws are broken, just how does he have a stake in the contract? There is a bankruptcy process but not an “Let’s Make A Deal” process after buyers remorse.
Well, in short, judges have always been able to re-structure debt and contracts in bankruptcy proceedings. And if they are allowed to do this, it will actually keep many properties from ending up in bankruptcy and declining in value and driving properties around them down in value.
Restructure is the nature of bankruptcy. It’s actually an anomaly that they can’t restructure this.
If the judges can’t do this, then the end result is more bailout money. I’m not for much of this kind of thing but I am solidly for this because it is MUCH better than throwing more bailout money at the problem. because for every foreclosure, we will end up paying more than if this is allowed to go forward.
Yeah, I get your point. but bankruptcy actually extinguishes contracts. Therefore, this would maintain a contract as opposed to extinguishing it.
>One Democratic backer of the bankruptcy proposal, Rep. Maxine Waters of California, said the banking industry “has owned this Congress far too long.”<
mad max, barney frank, chris dodd, fd raines, jaime gorelick, et al
created this mess.
This is unconstitutional. It destroys the doctrine of separation of powers. Judges decide actual cases and controversies and are not empowered to resolve policy differences without legal standards for guidance like a statute, ordinance or a constitution.
Why can’t the guy just become a renter instead and let the bank sell the house on the “private markets”
Having a judge determine the price of the house will mean I could buy a million dollar house hoping it goes up to 2 million. If it goes down to 300k, I declare bankruptcy making 700k. If it goes up, I profit as well.
Then u get mortgage rates at 20% like credit cards
That’s actually a good idea, but the banks won’t do that. Used to represent banks. There are actually ways to do this that are truly a “win win”. But if their is a way to restructure it so the banks get most to all of their money back, and we don’t have to pay for it, well, if done right, I just don’t see the downside. I’m just tired of we taxpayers picking up all these bills. And you KNOW that the banks aren’t going to have to eat this.
I can hear the TV commercials now:
Are you behind on your mortgage due to circumstances beyond your control and being threatened with foreclosure? Thousands of people just like you are finding relief by allowing the courts to adjust their mortgage terms to reasonable, easy payments. We at Dewey-Cheatham and Howe specialize in mortgage relief and help is just a phone call away.....
The Bullwinkle Lawyers?
and the legal basis for this is . . ? The mortgage company wants whats coming to them or an annulment. I agree to work for company X (under contract) for X dollars an hour. Then my drinking and gambling debts pile up. Now I want company X to pay 1.5X dollars/hour and the judge says okay. What makes that right?
Very well stated and agreed. That’s what the bankruptcy courts are for. Just because one goes to bankruptcy court and their contract is rewritten, doesn’t mean they can’t forever stay in the house if they don’t meet their obligations from thereon.
“...We at Dewey-Cheatham and Howe...”
LOL...a 3 Stooges fan? Things are getting weirder and weirder.
0bama is gonna implode before his first year in office.
cant’t = can
This will drive an IMMEDIATE downward spiral in housing prices. A plan where folks are rewarded for stopping mortgage payments is a disaster!
“3 Stooges fan?”
Soitenly!
These people are insane. The house is worth 50% and the guy is laid off. He still won’t make the payments. A new owner will be paying higher interest rates to cover this guys loss. The house is actually worth 75% of what it’s worth now. The spiral continues. Finally the spiral stops when the price reaches equilibrium. ... which means every ones home gets devalued. Just let the system crash. There is NO stopping it.
No, the bankruptcy court can modify contracts. See, for example 1322 (b)(2) "modify the rights of holders of secured claims...." or 1121 (b)(1)
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