Senator Biden made a statement during the debate that I was it such disbelief, I had to stay up for the replay to make sure he really said what he said.
He said I and Senator Obama support giving the power to federal bankruptcy judges to change the interest rate on a note and also to change the principle owed on a note if it would help the borrower.
ARE YOU KIDDING ME
That means that a judge could if he or she wanted to lower the interest rate and principal, they could at will. This is the idea that was put into the bail out bill and but was later removed from the bill. They have tried to write this into some legislation this year and each time with little help or support.
I believe this would be the end of mortgages as we know them. Mortgage Back Securities would be worthless, if investors thought that some judge can change their rate of return with the swipe of a pen. Who in their right mind would invest in other peoples homes, which until last week was what made this country great.
How would you feel if the manager of your retirement funds was to buy a stock for your 401k valued at million dollars - the very next day because some judge in Atlanta reduced the principal balance on a Fannie or Freddie loan by $100,000 - because it would benefit the person in BK? in one day with stroke of a pen your 401k dropped100k.....but what heck you should feel good about yourself you just help someone gain 100k equity in their home,
Remember the seller was paid the 100k so he got his money. The lender provided the 100k on good faith that the buyer would back the loan over time. When it is reduced who gets stuck with the 100k bill so that borrower can have a house with a 100k less than was agreed to when the bought the house.....YOU DO !!!!!!! So you take it from the people who made good decisions when they bought their home. This person then could sale the home and pocket the 100k...... what a country ...... by a house you can't afford and have judge re-do the contract and make nice profit by filing chapter 7.....what a country.
If you are going to reduce mortgages for some.... why not do it for all of us.....Would you not like to have some debt removed from your mortgage without having to pay it back ? ( This will destroy almost every American homeowners, home values ..... )
This would end the secondary market to the point no lender in the land would want to take a huge risk without risk base pricing to all borrowers including you, which means very high interest rates for mortgages. I believe this would be the death of our industry and would send the housing market even lower.
The very idea you could stop making your mortgage payments and file for bankruptcy and hope you get a judge who will lower your rate, terms and balanced owed..............................we all suffer.
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