Bankruptcy Law Allowing Mortgage Modification
By Kurt O'Keefe, Detroit Consumer Attorney on Jan 8, 2009 in Featured, Mortgage Issues In Bankruptcy
As pushed for years by my fellow bloggers, such as Illinois and Wisconsin bankruptcy attorney David Leibowitz, Congress is considering chapter 13 bankruptcy law (as explained by New Orleans bankruptcy attorney Kevin Gipson) changes that would allow courts to modify mortgages to allow homeowners to pay what their home is worth, instead of the entire balance, as a secured claim.
The reforms would also allow bankruptcy judges to change interest rates and other terms of mortgages on homes that are now worth less than what is owed on the mortgage.
Yesterday’s news was that home builders are coming around to supporting the chapter 13 bankruptcy reforms.
Today’s news is that Citigroup is talking to Congressional staffers about supporting the change, which would do a long way toward resolving the foreclosure crisis, (expounded on by Massachusetts bankruptcy attorney L. Jed Berliner) fallout from the sub-prime crisis (commented on by Michigan bankruptcy attorney Kurt O’Keefe) that hit the fan last summer. “A person close to Citigroup said that it is still negotiating details of an agreement with lawmakers, and that it hasn’t made a final decision to embrace the “cramdown” legislation. But the efforts mark a surprising change of direction by the financial-services industry. Banks have consistently fought such legislation. They say that cramdowns, when bankruptcy judges force lenders to modify mortgages, would raise borrowing costs for all home buyers.”
UPDATE – CITIBANK MAKES A DEAL! (Wall Street Journal)
This provision is included in the stimulus package Congress wants on the new President’s desk
January 21, 2009. It costs taxpayers nothing, compared to the trillions Congress has already thrown at this crisis.
Let your representatives know now! Help stop property values from the free fall decline they are in, slow the foreclosure rate, let the bankruptcy court infrastructure, already in place, deal with this.
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