Thread: Judges Could Be Allowed to Rewrite Mortgage Terms!!!

This is National suicide!!! Harry Reid and Dick Durbin have outdone themselves this time! If this insanity passes, millions of people who should never have been allowed to purchase a home will get a a temporary reprieve but the rest of the country (Us) will be paying for this foolishness forever! To raise mortage rates on an already faltering economy is National Suicide! We should not have to pay for the sins of predatory lenders and stupid borrowers!

Judges would be allowed to rewrite mortgage terms under a Democratic plan. Critics fear rate hikes.

By Jonathan Peterson, Los Angeles Times Staff Writer
February 26, 2008

WASHINGTON -- Over the opposition of the nation's lenders, Senate Democrats are seeking a change in the bankruptcy law that they say could keep hundreds of thousands of hard-pressed borrowers in their homes.

The proposal, part of the Foreclosure Prevention Act embraced by leading Democratic lawmakers, would allow judges to ease the terms of mortgage loans during bankruptcy proceedings.

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Lenders contend that the measure -- which could be debated on the Senate floor as early as today -- could force them to raise mortgage rates to cover the costs of loans that would not be fully repaid. They are backed by Republicans, who have proposed more modest changes.

"If this proposal becomes law, it will amount to a new tax on homeowners, costing them hundreds of dollars more per month and thousands of dollars more per year," David Kittle, chairman-elect of the Mortgage Bankers Assn., said in a statement. "The last thing potential homeowners, and those looking to refinance into new loans, need in this market is higher mortgage payments."

Supporters counter that the measure is needed, partly because lenders haven't done a good enough job modifying loan terms so that borrowers can stay in their homes.

Chapter 13 of the federal bankruptcy code allows bankruptcy court judges to reorganize an individual's debt, but it does not give them authority to fundamentally alter a person's primary home mortgage.
Although congressional proposals to change the code vary, they generally would give judges new, limited authority to reduce the size of a mortgage and freeze or even reduce interest rates.

For example, the Senate proposal, first sponsored by Sen. Richard J. Durbin (D-Ill.) and embraced by Majority Leader Harry Reid (D-Nev.), would empower judges to reduce the mortgage debt to a home's current, fair-market value.

The proposal also would grant judges some authority to reduce interest rates that have become unaffordable, potentially saving borrowers hundreds of dollars a month.

According to the private industry group Hope Now, 545,000 borrowers got some sort of help from lenders in the second half of 2007. But foreclosures continue to sweep the nation -- including 31,676 in California in the last three months of 2007, more than double the record set in 1996.

"[Lenders] put up big statistics about loan modifications, but they're just tacking on some payments at the end, or allowing people not to pay for a certain amount of time," said Hernan Vera, senior attorney at Public Counsel in Los Angeles.

"They're delaying the problem. They're not remedying it, long term," Vera said.

Advocates maintain that such a remedy can be found by changing the bankruptcy law.

Durbin said recently, "We should be giving families every reasonable tool to ensure that they can keep a roof over their heads."

"Small changes to an outdated bankruptcy code could help over 600,000 at-risk families keep their homes," he said in a statement, citing a finding of the pro-consumer Center for Responsible Lending. "That should be our goal."

Lenders counter that the ban on altering mortgages serves a valuable purpose, by bolstering lender confidence and keeping capital flowing into the mortgage market.

They say the proposed change could backfire by introducing new uncertainties that a borrower would honor the contract, leading to higher rates -- especially for sub-prime borrowers with shaky credit.

"It would introduce a major new element of risk into mortgage contracts, and that risk would be elevated for sub-prime borrowers," said Bert Ely, a banking consultant in Alexandria, Va., citing the opposition by lenders.

According to the Mortgage Bankers Assn., the measure would force lenders to raise rates by at least 1 1/2 percentage points.

In California, that would increase the monthly payment for the average home loan to $2,321, from $1,990, the group said.

http://www.latimes.com/business/la-fi-b ... 0932.story

The Democrats just have to do all they can to ensure that people do not need to take responsibility for their mistakes, don't they?

If people purchase homes that they KNOW they cannot afford, who is responsible for it? They or the government?

I'm sorry, but those of us who make do with what we CAN afford, should not have to "rescue" those who are too dumb to do their research before making such large purchases.

Originally Posted by miguelina

The Democrats just have to do all they can to ensure that people do not need to take responsibility for their mistakes, don't they?

If people purchase homes that they KNOW they cannot afford, who is responsible for it? They or the government?

I'm sorry, but those of us who make do with what we CAN afford, should not have to "rescue" those who are too dumb to do their research before making such large purchases.

The Fed and the Government bail out the Banks. Why not help the people a bit? The Banks gave loans to anyone with a pulse. They are just as culpable as the borrowers, if not more so!

Not saying that what is proposed here is a good plan by any means.

The banks should not be bailed out. They should take the hit, since they had no problem making the loans. Neither greed nor stupidity should be an excuse.

Originally Posted by Pistov

Originally Posted by miguelina

The Democrats just have to do all they can to ensure that people do not need to take responsibility for their mistakes, don't they?

If people purchase homes that they KNOW they cannot afford, who is responsible for it? They or the government?

I'm sorry, but those of us who make do with what we CAN afford, should not have to "rescue" those who are too dumb to do their research before making such large purchases.

The Fed and the Government bail out the Banks. Why not help the people a bit? The Banks gave loans to anyone with a pulse. They are just as culpable as the borrowers, if not more so!

Not saying that what is proposed here is a good plan by any means.

Pistov, the problem is that it's going to raise mortgage rates on everyone else who wants to buy or re-finance...they will have to pay for the sins of the gov., lenders, and stupid borrowers. Mortgage rates have gone up a full point in the last month and, at the same time, credit is so tight that good borrowers cannot get a loan. Why should we take the wrap for all the c#ap!