Curent Stat of Bankin Indstry Screams Fr Bnkrptcy Judgs To Hv Powr To Modfy Mortgags!

[JimofPennsylvan]

The current state of the Banking Industry with the foreclosure legal process being made a mockery of with loan servicers using robosigners to process the foreclosure paperwork (not conducting the mandated reviews), with twenty-five percent of home loans having an outstanding principle worth more than the value of the home mortgaged and the number of home’s being foreclosed on reaching numbers not seen since the Great Depression it creates an overwhelming call for giving bankruptcy judges the power to modify home mortgages the power to reduce the principle on loans to the current market value of the home mortgaged so people can afford to stay in their homes. There have been an abundance of people in this country that have been calling for this for two to three years ever since the housing bubble burst (a housing bubble caused by the banking and mortgage industry and their negligent underwriting practices) and the country’s great recession largely caused by this housing bubble and the banking industry’s over leveraging which caused the stock market to tank and the credit markets to seize-up which ultimately caused large numbers of borrowers not to be able to afford to pay their mortgages. Moreover, it really isn’t a bad deal for owners of home loans if Washington gives Bankruptcy Judges this power to cram down these loans because if these homes are foreclosed on in this real estate market which is so flooded with inventory these owners will get decimated often only get around fifty to sixty percent of the home’s market value especially when considering all the costs involved!

This foreclosure processing debacle has revealed that in this home loan and related securitization of home loans industry the banks and the other participants didn’t do everything they were supposed to in record keeping on transfer of ownership of loans besides not having done everything they were supposed to in working with borrowers to avoid foreclosures. The equities or protection of legal rights of borrowers scream out for finding a way out of this foreclosure crisis for the nation if at all possible and giving bankruptcy judges cram down power on home mortgages is such an out; bankruptcy judges can cram down loans for automobiles and if I am not mistaken they can cram down real estate loans for vacation homes it makes no sense whatsoever not to give bankruptcy judges this power for five years to get the nation through this crisis.

The banking, mortgage, home loan servicing industry has clearly demonstrated that their system is a bad system, it is a system that can’t handle a large recession, in such an economy it can’t adequately service borrowers, not only distressed borrowers but also borrowers looking to refinance their loans. Just yesterday, the Secretary of HUD publicly stated that his organization will soon issue a report concluding their investigation revealed some home loan servicers performance has been deficient during the past couple of years. The media and the internet have provided truly huge numbers of instances where borrowers have been treated in a shockingly bad manner; this industry killed itself, its own performance shows conclusively it is broken. Now, Congress has a job to do to protect the American people from this broken home loan system; changing the bankruptcy code as outlined is part of this job!

The media has widely reported that attorney generals across the country are investigating these banks and home loan servicing companies on this foreclosure processing problem. Not only does the industry face this issue but they should be facing the issue that they were given sixty to seventy billion dollars of TARP money to rework mortgages that reasonably could be reworked and most people that have followed the reports of the industry’s performance in this program know the industry bungled their obligation here, that is, more distressed borrowers should have been approved for affordable home loan modifications but weren’t because of the industry’s deficiencies. Further, this tidal wave of foreclosures the industry wants to embark on isn’t in the best interest for the owners of the securities for these loans because these owners are going to take a financial bath with these distressed foreclosure sales; I don’t know if these loan servicers have a fiduciary duty to these owners or if they just have a duty to inform these owners of options they have to avoid the very material losses they will be incurring if the foreclosure course is pursued as planned but either way the law likely supports these loan services getting their pants sued off them if they pursue this foreclosure path. Congress can largely give America an out on this giant mess by changing the bankruptcy code as suggested! This issue is really important to the American people it will materially affect America’s housing industry an integral part of our economy; in this election cycle the one that ends this November 2 there should be a “litmus test” for candidates, that is, does the candidate support changing the bankruptcy code to allow bankruptcy judges the power to reduce principle on home loans to market value and thus avoid a foreclosure – if the candidate’s position is no that candidate isn’t prepared to hold office their biased toward banks and/or don’t have the wisdom to be a good steward of America’s economy!