Law Offices of David P. Leibowitz LLC
Lakelaw is a registered assumed name for Law Offices of David P. Leibowitz LLC
The Senate voted decisively against allowing residential mortgages to be modified in Chapter 13 bankruptcy cases. It was a decisive vote. Only 41 Senators voted in favor – we know that 60 senators would have had to be in favor to get past a filibuster.
Why is it that a shopping center developer like General Growth can cram down their mortgages but ordinary American homeowners can’t? Why is it that bankruptcy is OK for Chrysler or GM to cram-down their reluctant hedge-fund bondholders but it’s not OK for an American homeowner who can’t even get a mortgage lender to talk to her?
Senator Durbin tells us exactly why – and we should be angry about this! We should be furious. People should be marching on Washington. Yet we seem not to care. We seem to think our neighbor should suffer, not realizing that in so doing, we are hurting ourselves.
The banks — hard to believe in a time when we’re facing a banking crisis -
many of the banks created – are still the most powerful lobby on Capitol Hill.
And they frankly own the place!
You would think that We, the People own the Senate. But we don’t. Unless We, the People, tell Senators that we won’t condone them acting as lackeys for the banks, the Senate will continue to take the banks’ money and stick it to you.
Why do banks care so much? The answer is in three little words – “Mark to Market.” This means that if lenders have to realistically value their assets – like their residential mortgages – to what they are really worth – they would have less assets than liabilities. In other words they would be broke – bankrupt – insolvent – closed – in receivership – taken over by the FDIC. Moreover, bank chairmen, directors, officers and their ilk would be unemployed, lose stock options, perks, private jets and their rich and famous lifestyle in general. This, dear readers, is what the Senate now stands for.
Henry Sommers, past president of the National Association of Consumer Bankruptcy Attorneys put it well when he said:
“In terms of what this was really about, my opinion is that the insolvent banks do not want to reveal the emperor’s lack of clothes, because if their assets were marked to market, their true value, the insolvency would be obvious. Fighting cramdown is part of that, as is the Obama mortgage plan, which does not require any principal reductions. The negotiations about the bill left me very doubtful that many people will even get the Obama plan modifications. When there are more foreclosures threatening banks’ balance sheets (and further dragging down the economy) they will want more bailouts.
Unfortunately, Summers and Geithner can’t escape the bank culture whence they came. They cannot contemplate shutting down the insolvent banks and are therefore over a barrel. If you have not done so yet, you should definitely listen to the This American Life’s show on the topic.”
If you’re mad as hell and won’t take it anymore, then gear up to support whoever will oppose any incumbent Senator who failed to stand up for you when they next run for election. This is still a democracy, right?
If you are trying to get a mortgage modification or mortgage finance plan under the Obama Home Affordable Plan and can’t, please tell us about your experience. We may be able to publicize your plight in the press or in Congress.
For bankruptcy help in Chicagoland, call Lakelaw now at 847 249 9100 or toll free at 1-866-LAKELAW (1 866 525-5359)
It’s not easy to contact a mortgage servicer. They say they want to help you get a loan modification agreement. But first, you have to find them. Here’s a handy list of phone numbers. Hopefully, this will help you on your way. And if you need more help, call Lakelaw at 1 866 LAKELAW instead of the mortgage modification company scammers that the United States Department of Justice and Attorneys General around the company are trying to shut down
HOW TO REACH YOUR MORTGAGE COMPANY
Phone: 800-848-9136 (Mortgage)
Phone: 800-836-5656 (Home Equity)
These numbers and the identities of the banks and mortgage companies are changing every day. If you find out any updates, please let us know and we will post them here.
Senate Bill 61, introduced by Dick Durbin (D. IL), is entitled Helping Families Save their Homes. This bill, if enacted, would allow borrowers to use chapter 13 to modify their mortgages, even if they couldn’t cut a deal with their lender outside of bankruptcy. Mortgages could be marked down to the present value of the house. The rest of the loan would be paid under a chapter 13 plan over a period of five years – and not necessarily at 100% either. Interest rates could be cut. Prepayment penalties would be out. Consumer protection claims would be preserved. No more flim-flam junk charges on mortgages would be allowed either.
Sounds good? Well not to most mortgage lenders. They are geared up to fight this tooth and nail. The American Bankers Association still opposes using Chapter 13 to modify home loans.
BUT – In a stunning turn of events, Citibank now supports this legislation. How did this happen? Here’s the deal. The new law would apply only to mortgages in existence at the time the legislation was passed. And the borrower would have to first show that he or she tried to get a loan modification before going into chapter 13 bankruptcy. There are other points too – but these are the main ones.
Remember, making laws in Congress is a lot like making sausage – the end product may taste good but the manufacturing process isn’t pretty. Stand by – we’ll keep you informed.