In a letter sent to every US Senator, the National Association of Mortgage Professionals (NAMP) said that "... the bankruptcy cramdown provision of S 2636 (Foreclosure Prevention Act of 2008) as it is currently written, will further destabilize the economy and place consumers in even greater peril as the credit markets continue to face serious challenges and the availability and affordability of credit continue to decline."
If approved as written, this bill would re-open the Bankruptcy Code and allow judges to write-down mortgage balances owed under valid mortgage contracts.
While everyone agrees something should be done to ease the credit crisis and slow down the foreclosures, you don't need to be a rocket scientist to see what this Senate Bill could do. Mortgage money is offered at today's rates because investors like you and your retirement plans believe that they are reasonably secure. Maybe not as secure as a CD, but if they were, you would only receive 3-4%. If they now become more risky because of the arbitrary risk of a write-down, the rates will have to increase to convince investors to purchase mortgage backed securities. How will this help someone that is trying to refinance to a fixed rate or lower adjustable rate mortgage?
Please contact your US Senator and ask them to oppose this bill as written.
Have a great day!
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