Capitol Hill is once again working on financial institutions to make it easier for people who can't afford the mortgages they agreed to pay to stay in their home even longer by forcing lenders to "CRAMDOWN" the amount of the loan or extend the length of time a borrower has to pay. See Business Week article October 19, 2009 entitled "Return of the Mortgage Cramdown?"
Several proposals are floating around Washington that would force lenders to pause before foreclosure and offer a break if they qualify under a Treasury program. Another proposal would require mediation before being allowed to foreclose while yet another one offers $$$ ($6.4 BILLION) to help homeowners stay put. Another bill has also raised its head again which would allow bankruptcy judges the ability to cram an adjustment down the lenders throat.
We all know that modifications are just prolonging an almost certain death anyway. Making lenders delay even longer will just increase the expense and administration costs of loans. Guess who is going to end up paying for that? You guessed it, those of us who are paying our mortgages on time. It would also divert a lender's staff who are trying to get new deals done, thereby slowing the process for new buyers of the properties. This in turn would just slow down the inventory clearing that has been happening as a natural consequence of our free market economy (its worked in the past, why not now?). In my mind, time is of the essence and we need to let the problems in the housing market run their course rather than making the recover tougher and dragging this mess out.
It seems the White House is not as aggressive in its support of such bills, but there seems to be a lot of squeaky wheels greasing the skids of the Congressman. Since midterm elections are coming up perhaps a few of the folks up for re-election are trying to make a name for themselves. The rest of us need to start being squeaky with our representatives in Washington so the minority don't make this mess an even bigger one.
Comments(1)