Cram-Down Bill Moving Forward
Categories: Bankruptcy, Current Events, Foreclosure
The One Hundredth Eleventh Congress is starting off on the right foot:
Legislation designed to stem foreclosures by allowing bankruptcy judges to erase some mortgage debt will be introduced by Congressional Democrats on Tuesday, and hopes are high that it will pass after a similar plan failed last year.
Democrats in both the U.S. House of Representatives and Senate plan to introduce the legislation.
If it passes, this legislation will allow bankruptcy judges to rewrite the terms of mortgages held by bankruptcy filers, potentially preventing thousands of people from losing their homes. The bill is being shepherded forward by Rep. Brad Miller (D-N.C.) in the House and Sen. Dick Durbin (D-Ill.) in the Senate. President-elect Obama supported the legislation last year and can be expected to sign the bill if it passes this year.
If this bill does not have an exemption for private seller carry back mortgages, it has the potential to destroy tens of thousands of people. Retired couples who sold a property with seller financing can end up with a large portion of their net worth acquired over a lifetime tied up in private mortgages.
Other small investors have purchased private mortgages as an investment. This is primarily a private market with small investors. Very few financial institutions invest in or hold these mortgages. Small investors and retired couples will be devastated through no fault of their own. Financial institutions may be able to weather these type of losses and of course, the government offers them bailout funds in addition. Private individuals cannot and should not be destroyed by this legislation.
Comment by John D. Behle — March 7, 2009 @ 10:46 am