House of Representatives Shoots Down Bankruptcy Mortgage Modification, AGAIN!

[HHM]

December 19, 2009

Since the beginning of the housing crisis, a number of bills and amendments have been proposed to allow bankruptcy courts to modify the terms of primary mortgages or first mortgages in chapter 13 bankruptcies. Presently, the bankruptcy code provides no mechanism for altering the terms of a mortgage for an individual’s primary residence. The fact that bankruptcy cannot adjust mortgages is odd given the grand scheme and goals of the bankruptcy system which is to allow individuals and business to reorganize their debt; yet the code does not allow any reorganization of an individual’s largest debt, her mortgage.

The current incarnation of the amendment was offered by Rep. John Conyers to be included in a broader regulatory bill. This amendment passed the house earlier this year, but on December 11, 2009, 50 democrats who previously supported the measure changed their vote, so the amendment failed 188 to 241. The Senate version of the bill died in committee earlier this year.

This result is an unfortunate turn of events. The bill would have allowed homeowners to reduce the principal balance of their mortgage to the current market value of the home (which is not being done under any of the other modification programs); and convert the loan to a 30 year or even a 40 year fixed rate mortgage. Thus, this bill would make modifications reflect the reality of the real estate market and put people back into traditional, reasonable mortgages. And better yet, it would not cost taxpayers anything. This bill does not require bail outs, incentives, tax increases, or anything else to fund it. Instead, it does what should have been done all along; make banks share the risk of the declining real estate market.

Since the banks received their bailouts and the Federal Reserve started buying the so called “toxic” mortgages, and despite the horrendous statistics showing the utter failure of the various mortgage modification programs, the foreclosure crisis has taken a back seat.

http://askmethner.com/?p=880

U.S. House Rejects Mortgage “Cramdown" Measure; Reuters.

[JRScott]

It would be nice if Congress would afford the American people the same protections and special treatment they give their 'fat cat' partners.

[justbroke]

If "pro" means for, and "con" means against. And, "progress" means to move forward... what does congress mean?

I'm so tired of the politics of our great Nation. This is purely and simply driven by the financial services lobby. The same folks that actually authored the failed "Bankruptcy Revolution" (the BAPCPA of 2005).

Everyone on this Forum should take note of which Congresscritters voted against this measure, and then, if they represent your District/State... not cast a vote to re-elect them next November 2010 or November 2012. Unless and until We The People wake up from our dream world, the rabbit hole is only going to get deeper.

[Flamingo]

"This result is an unfortunate turn of events. The bill would have allowed homeowners to reduce the principal balance of their mortgage to the current market value of the home (which is not being done under any of the other modification programs); and convert the loan to a 30 year or even a 40 year fixed rate mortgage. Thus, this bill would make modifications reflect the reality of the real estate market and put people back into traditional, reasonable mortgages. And better yet, it would not cost taxpayers anything. This bill does not require bail outs, incentives, tax increases, or anything else to fund it. Instead, it does what should have been done all along; make banks share the risk of the declining real estate market."

Thre are a few good reasons why there is difficulty with this and some are (these are thoughts from Letters to the Editor and other articles at the time this all started that were discussed on here previously in various forums...): (1) Why can't all folks who have mortgages obtain a reduction in principal since all houses lost value and their mortgages redone to reflect the lower amount; they are struggling also in this econony some working 2 to 3 jobs to keep their homes. After all, their homes lost value too; and (2) imagine the influx of folks lining up in any way possible to file Chapter 13 to take advantage of the situation.

[albacore44]

i just watched another neighbor give up, abandon his underwater property, and slip out during the night. their son had stopped by yesterday talking to my son, and told him they were taking their motorhome for a weeks camping trip. but i watched as they moved things out late into the evening, and now the house looks abandoned. I checked realtytrak and the address now shows bank owned. It is really a shame whats happening in this country, and we are really hit hard here in the IE. This tract of homes started construction is 2002. they are mcmansions that started at about $350k but rapidly appreciated topping out in early 2007 at about $1M. many neighbors are in forclosure, i can see their properties listed in Realtytrack. The forclosures are reselling after many months, but well below what most people owe.

These so-called help for Homeowners plans are just smoke and mirrors in my opinion. i can understand it from a banks standpoint if someone looses their job, gets behind, and has no hope of catching up.

But what about those who have a job, and just really need a good modification with a reasonable loan/rate so they can continue to make payments ??. seems like good sense to keep them in the house, take their money, instead of loosing money through the forclosure process. and when this happens we all lose as americans, as our property values continue to decline, more people go underwater, then make the decision to walk away

[HHM]

The housing problem isn't going away anytime soon. Some are estimating there are an additional 4.5MM homes awaiting foreclosure to start.

[lrprn]

One of the primary problems is that far too many of the mortgage lender banks and credit unions are refusing to participate in the modification programs that are available or refinance the loans themselves. Instead all the emphasis has been placed solely on maintaining their own profit margins without taking on any risk at all after driving themselves off the cliff last year greedily taking on way too much risk to increase profits even more. Most lenders have made the conscious choice to not modify mortgages and screw everything and everyone else.

It's all about short-term rather than long-term results because way too many of the financial measures used in this country are based on quarter margins and maximizing stakeholder profits. It's a stupid way to run a globally based economy, as we in this country have discovered yet again.

[banca rotta]

The real problem is that real estate, residential and commercial were bubbles that POPPED!

No matter what Bama, the Fed, the banks and credit unions try they will not reinflate these bubbles since no one has the income to support them.

Sooner or later the greenback will POP and we will all wish we had today's small problems.

[banca rotta]

The housing problem isn't going away anytime soon. Some are estimating there are an additional 4.5MM homes awaiting foreclosure to start.

Yeah but Bama and his "crew" said we are in recovery and they saved us from the brink. Right?

I am ignoring all the unemployment, forclosures, bk filings, tent cities, food stamps and bank failures and will put all my faith in our "leaders".

I think you all should too. Just look for the green shoots.

[albacore44]

The housing problem isn't going away anytime soon. Some are estimating there are an additional 4.5MM homes awaiting foreclosure to start.

I guess I shouldent complain as the more this continues to happen, the better chance i should have at setteling with my underwater 2nd mortgage, at least in theory

[Mi Bankruptcy]

I watch Newt Gingritch (sp?) make a statement on Meet The Press last Sunday. He said there are three bubbles and two have popped.

1)Technology bubble
2) Housing Market
3) The government bubble which is about the pop..

I won't believe number 3 until I see it.

[JRScott]

I watch Newt Gingritch (sp?) make a statement on Meet The Press last Sunday. He said there are three bubbles and two have popped.

1)Technology bubble
2) Housing Market
3) The government bubble which is about the pop..

I won't believe number 3 until I see it.

Newt's referring to the fact the government has already promised more than it can pay out. The unfunded liabilities combined with the national debt means that if the federal government took everything from everyone they'd still be about 39 trillion short. (not to mention your personal debt, local govt debt, state govt debt).

Today's dollar is worth 10% of what it was worth in 1913 when the Federal Reserve was created. It is worth 1/3rd of what it was worth in 1980.

The government unless it changes course will default on the national debt within 5 years. To avert that will mean very hard choices that the current crop of politicians mostly more interested in being elected than serving are not willing to do. When it defaults you'll see an economic meltdown similar to the 1870s.

It is very wise at this point that you should be concerned with saving money, but more importantly making sure you have a good stockpile of nonperishable food to feed your family. I'd suggest at least a year's supply. Make sure to have a gun and ammunition as well as you might need to protect your family.

[Mi Bankruptcy]

I always wonder what a years supply of food looks like.

[justbroke]

I always wonder what a years supply of food looks like.

Well, if you're a survivalist, it consists of rice and flour, mostly. I'm talking 50lb bags of rice stacked to the ceiling!



Here's what it looks like, if you buy it from a survival company. You can build your own supply as well by stocking up. However, you really need to take notice of the shelf life of various products and how to store them.

(Note: that kit above is for one person for one year, with 2 square meals per day, and has a retail price of almost $3,000.)

[JEM]

I found a website with some good info about being prepared.

http://www.areyouprepared.com/Food-S...nits-s/142.htm

I'm nowhere near THAT prepared. But after we file--I will be stockpiling food. My husband has guns and ammo already--and can hunt (as well as fish).