Real Estate Blog - CITIGROUP MAY BE COMING ON BOARD WITH THE BILL TO PERMIT BANKRUPTCY JUDGES TO MODIFY MORTGAGE LOAN BALANCES!

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CITIGROUP MAY BE COMING ON BOARD WITH THE BILL TO PERMIT BANKRUPTCY JUDGES TO MODIFY MORTGAGE LOAN BALANCES!

* ALERT * ALERT * ALERT

ONE SMALL STEP for the consumer???

"Citigroup became the first major bank to support a controversial plan to let bankruptcy judges alter mortgages in a effort to prevent more housing foreclosures." More. . . . CNBC - 4:22 P.M. January 8, 2009.

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This is not a reBlog. This is a rePost. Who knows? Perhaps someone is listening.

CALL TO ACTION!

EUREKA - AT LAST - A VOICE IN THE WILDERNESS. Rep. Brad Miller, D-N.C. introduces "cramdown" legislation. January 5, 2009

American Home Owner

WILL CONGRESS SUPPORT THE AMERICAN HOME OWNER? OR WILL THEY FOLLOW THE BANKING LOBBY?

Posted by Lenn Harley, Real Estate Broker, Maryland & Virginia on 01/08/2009 04:21 PM

Comments (27)

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27 Comments on CITIGROUP MAY BE COMING ON BOARD WITH THE BILL TO PERMIT BANKRUPTCY JUDGES TO MODIFY MORTGAGE LOAN BALANCES!

JAN

Lenn, it seems like that is excessive power for judges, even though it could be used in a beneficial way to debtors.

Gary. Not at all. Bankruptcy judges have had the authority under the code to modify mortgage banances for commercial, second homes, vacation properties, etc., for a long time. The new code specifically eliminated their ability to modify primary residence mortgages.

This will be welcomed relief to some few home owners who will use it.

Lenn - I have yet been unable to see the details on this. I have little faith than anything this important will be thought through enough before being passed.

Wow, pretty exciting. Sounds like some large players are coming around. Do you really think it'll happen Lenn?

Lenn,

I thing judges will use this power responsibly and I think the banks would agree that the people who file bankruptcy and might be able to afford a modified loan will be better than handing it back to the bank all together.

Hi Lenn.. YaY! I read a post earlier that said Bankruptcy judges could restructure the debt on corporate jets, vacation homes...etc...but not owner occupied residences.... HUH?? it's about time... :)

God protect us from the well intentioned!

If the Banks want to adjust balances and payments they can do it now.

Bill

Any banker that looks at the numbers from short sale and foreclosures can only come to the conclusion the cram down may be a very smart tool.

Could it be that since they were bailed out by the Feds they are just parroting what they are told to say? It seems anti-business sense to do this. If I lent 200K to a qualified buyer, and we had all signed off on it, why would I want a judge the right to prevent me from taking what is rightfully mine under the agreement and law. If I owned a mortgage company, I would close shopif this were allowed. Maybe this is what would work in Eastern Europe, but this should not be occurring in the USA. IMO a ruling like this would make it unlikley anyone would want to lend.

Lenn- Who is holding a gun to their head to make them agree to this or what is in it for them? Does not make financial sense for a bank to say yes to this. Perhaps higher interest rates based on the bigger risk?

Jim- I so agree with you. Why would you as a lender ever give up your right to repayment that is already agreed upon? I don't get the thinking and I must agree it has something to do with their bail out.

JAN

Sorry folks, I tried to post answers but got a message that I did not enter the graphic correctly and all of my answers were dumped.

Bill A.

"If the Banks want to adjust balances and payments they can do it now."

Precisely, they could but won't and don't, except, of course for the well off who wish to modify the loans for their Miami Condos and Mountain Retreats.

Jim, Katerina. Of course, it has everything to do with their bail-out, pay-off.

"The government agreed to give an additional $20 billion of capital to the bank last month under the Troubled Assets Relief Program, on top of the $25 billion it received in October." More. . . .

Citigroup has gotten $45,000,000,000 from TARP. They want to be a player. They and their lobbiests will now be in a position to help draft the legislation. Vikram Pandit is one smart cookie.

Terry. I agree. With the Dems coming in, the recent revisions to the bankruptcy code could be completely reversed in favor of the consumer.

Bill A. "If the Banks want to adjust balances and payments they can do it now."

They could have but won't, wouldn't and didn't.

Konnie. Indeed. How much sense does it make that the well to do can have their mortgages on second homes, beach condo and mountain retreats modified, but the average consumer cannot have the mortgage on their family home modified in lieu of foreclosure???????

Brian. As a former bankrutpcy trustee, I greee. Bankruptcy judges are an uniquely responsible group, within the bankruptcy code.

Krista. Probably not as consumer friendly as I would like but it's one small step for the consumer, which is long overdue. All of the relief has been for the banks up to now.

Hi Lenn:

Yes, let's just hope someone out there is listening!

ToulaRosebrock.com - DianeTurton.net

YES, finally one baby step.. Sure better than nothing.. This will also help avoid bankruptcy because the consumer can get a modification in court if the bank wants to force the issue. Which will not be in the bank best interest (cost them more).

Mark. The legislation will require that the consumer begin by contacting the lender. I oppose that but they're not listening to me. All that does is send the consumer into the Lion's den.

Toula. Indeed. My fingers are crossed. I don't really hold out a lot of hope for this. The banking lobby hasn't yet been heard from.

Hi Lenn,

I thought of you when I saw this headline yesterday.

I'm still not sure what to think about the proposal and would want to read up on the proposed legisaltion before commenting on it - that being said, what is currently being done is not working and as such, we need to look at other solutions.

Happy New Year Lenn, I support the Banks doing loan modifications 1 million percent and believe they should do this before one needs to declare bankruptcy. am opposed to Judges doing this as it set a precedent for Judges to then feel that other other types of contracts or agreements can be modified. If this becomes law, the floodgates will be open in Contract Law and most of our society will have taken the quantum leap that binding agreements can and will be altered by the courts based on ?????????.

Mark. More and more folks are coming to the realization that the negative equity is the bottleneck in the real estate industry.

William. And if the banks continue to refuse to modify mortgage balances and the industry remains log jammed and moribund???

WILL THE MADNESS EVER END?

Lenn, sorry if I don't share the same excitement. It seems to me that while this may legitimately help some home owners that are in trouble because of loss of job or illness, it will also be missed used to bailout some that could never afford the house from day one and should have never been given the loan. This just seems to smell of another bailout at a cost to the tax payers and for those that handle their finances in a responsible manor.

George. I agree completely. However, along with those who should not have been given loans are millions of home owners who should have, make down payments, qualified, etc. and today, through absolutely no fault of their own, are saddled with negative equity and are hostage to their mortgage.

In normal times, when folks have a need to sell, they can do so. In these times, folks who have a need to sell cannot no matter how legitimate their original purchase.

These are the home owners that can be helped.

Neal. In a while. In a while.

JAN

Lenn, My concern isn't that the modifications are done but if the change of the current law allowed the bankruptcy court to modify the primary residences and contained language that "only if the the banks refused to negotiate on the needed modifications ( in other words-voluntary work outs), and also that this is a measure of exception of current contract law, I could agree.

JAN

Citibank can take a flying LEAP. I'm up to here with them..(insert photo of my head barely above water). They need to clean up their home first! Case in point: I own a rental that they hold the mortgage on. I've NEVER been late, in the 4 years that they have held my note. A few months ago I began getting late notifications. (I pay online, ON TIME, each month). Spoke to customer service...no clue why it shows late. They have all payment history and STILL say I'm late. I show them each payment, I have my proof. Fast forward...come to find out, my escrows were increased $20.00 and they took it upon themselves to NOT apply my payment, stating it was $20 short each month, for the past 8 months. They now say I owe them over $1400.00 in late fees and penalties to bring my load current. ARE YOU KIDDING ME? I've talked to 4 supervisors that said they would correct the situation and apologized profusely. 4 months in a row, 4 different supervisors....I just received another late notice yesterday, for last months payment. Now, I"m ready to wring some Citibank necks. Citibank took it upon themselves to leave $2800 in "an overage account" that did not make it to my payment, because it was short $20. Best of all, it shows I now have LATE PAYS on my credit. Now, I'm hopping mad. I won't stop until some heads roll at Citibank, I can promise you that. I have gone above and beyond to prove my case and they agree, they were in the wrong. Have they fixed it, YET? Nope! Look out Citibank...I'm comin' after you! I know the drill at C.B now. Obviously, they need to speak with my attorney :)

Now, what was my original comment going to be?

Elizabeth. Geez. I read your comment and all I could think about was the lasting harm to your credit report.

William, William Darling William. I could NOT DISAGREE MORE. The proposed changes to the bankrputcy code/act are that the home owner can file a petition for bankrputcy and seek mortgage principle modification ONLY after contacting the lender.

MY GOSH! Why offer a starving man a meal only after making him crawl through the Lion's den.

If the mortgage companies had systems and a policy in place to modify the balances and eliminate negative equity, that would be one thing. GEEZ. They can't even handle a short sale or foreclosure with any reason or timely disposition. Further, they have already exhibited a total lack of interest in REASONABLE mortgage modification.

The banks, in my opinion, have forfeited any standing in having a voice in mortgage modification.

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