FORECLOSURE PREVENTION PLAN.....

NEW -> Contingent Buyer Assistance Program
Alan,



One would hope that the BK system figures out a way to handle the surge so that folks who get into the system due to legitimate reasons like medical bills, persistent unemployment, etc. are protected while people who utilized liar loans, etc. are dealt with equitably. The problem with the BK system is the numbers, many BKs are reduced to very clerical cases with little real judicial oversight.
 
We need to keep in mind that judges are people too. Just because a judge can reduce someones mortgage doesn't mean that they will. If the judge believes they gamed the system, they may chose not to lower the principal amount.
 
We will soon start seeing lots of RE BKs in addition to the ones we see now for other reasons like medical. Buyers really stretched for homes during the bubble and a lot will not be able to make their payments. Some people will BK to keep their house - even without cramdowns, a lot of states have homestead exemptions. Others will take foreclosure - but while the banks have in the past been willing to let the balances slide, when $100K plus shortfalls are routine they will pursue the balance in the non-recourse states. Fannie Mae has said exactly this - they'll let people facing death or divorce go but if they think you can pay, they're coming after you. Foreclosed FBs are often going to have to go to BK when their old mortgage holder comes after them with a big judgement.



CM_Dude - I hope it was clear I wasn't criticizing *you*. I'd be quite the hypocrite to ding you for not reading a bill you commented on, because I often don't have the time either. But we're not writing an opinion column for a widely circulated paper. And yeah, the BK avalanche will be a big problem, especially since it will be coming during a time of tight state budgets when cutbacks will be the order of the day.
 
Fair,



No worries, I didn't take it personally! Righeimer's column is an opinion piece, but he is a "developer" and Costa Mesa Planning Commissioner, as well as an OCGOP Golden Boy, so one would hope he would check his facts before riling people up.
 
This from an interview I saw this morning on CNBC and was later transcribed on Calculated Risk<p>

<b>QUICK</b>: Any of the intervention plans we've seen from the government strike you as being a good idea?<p>

<b>BUFFETT</b>: Well, that -- I haven't seen the details on many of them, but I think it's very hard to start interfering with markets without having a whole lot of unintended consequences.
 
This was actually proposed by FDR in 1933 at the peak of the Great Depression, but it kind of rings a bell with some of the types of things talked about today...





"...I ask Congress for legislation to protect small home owners from foreclosure and to relieve them of a portion of the burden of excess interest and principal payments incurred during the period of higher values and higher earning power...





"...special safeguards should be thrown around home ownership as a guaranty of social and economic stability, and that to protect homeowners from inequitable enforced liquidation, in a time of general distress, is a proper concern of the government...





"The terms...(provide) machinery through which <strong>existing mortgage debts on small homes may be adjusted to a sound basis of values without injustice to investors, at substantially lower interest rates and with provision for postponing both interest and principal payments in cases of extreme need</strong>..."





(April 14, 1933 Wall Street Journal)





Oh, and another tidbit - when I was flipping through I found that California placed a 60-day moritorium on foreclosures at around the same time...it was found to be unconstitutional both at the state and national level, for one because it prevented the sale of homes and farms but not other types of properties.
 
Is what is happening today a fair comparison to what occurred in 1933? We people able to buy homes with no money down? I don't know, which is why I am asking.



It seems that protecting equity was the goal. Today, there is often no equity.



I honestly don't think this applies today: "...protect homeowners from inequitable enforced liquidation."



Taking a home away from someone who has put virtually NOTHING into it is hardly inequitable.
 
<p>CM_Dude,</p>

<p>Tanta over at CR did a little history lesson that touched on your question:</p>

<p><a href="http://calculatedrisk.blogspot.com/2007/12/mud-luscious-balloons-for-ubernerds.html">http://calculatedrisk.blogspot.com/2007/12/mud-luscious-balloons-for-ubernerds.html</a></p>

<p>Also, a great rundown on the "GD" is here: <a href="http://www.geocities.com/capitolhill/senate/6854/greatdep.html">http://www.geocities.com/capitolhill/senate/6854/greatdep.html</a></p>

<p> </p>

<p> </p>
 
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