Cramdown Loan Modification Legislation Approved

Posted on January 9, 2009. Filed under: bankruptcy, Foreclosure Defense, Legislation, Loan Modification, Mortgage Law | Tags: , , , , , |

Banks and the building industry are purportedly working together with Senators on “cramdown” legislation affecting bankruptcy judges’ powers regarding mortgage loan modifications. The rule change would give bankruptcy judges the power to change repayment terms for certain homeowners who declare bankruptcy.

The Wall Street Journal reports that lenders including Citigroup are cooperating with key Senators on “cramdown” legislation to increase bankruptcy judges’ power to modify the payment terms (loan modification) on primary home mortgages. As of last October, the WSJ reported that almost one in six homes was worth less than the value of its mortgage. “Cramdown” (or “strip down”) refers to taking the value of a home’s mortgage and cramming it down to the current value of the home.

Illinois Senator Dick Durbin introduced legislation including court ordered workouts of individual mortgages on Tuesday’s first day of the new Congress. Endorsement of cramdown provisions by lending institutions could bode well for passage either separately, or as part of the anticipated Obama stimulus package.

Read more…

Advertisements

Make a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Liked it here?
Why not try sites on the blogroll...

%d bloggers like this: