Thursday, September 10, 2009

How Does The “Cramdown” Legislation Affect Note Workout?

Last month House Banking Committee Chairman Barney Frank (D-Mass.) said modify my note programs may be helping more homeowners but they aren’t anywhere near the level they should be. These programs are coming in the form of the Obama’s Making Home Affordable (MHA) and HAMP, plus many more attorney mortgage modification options that are offered by the mortgage companies. In general, homeowners are very much in agreement with Barney Frank’s assessment about Loan Adjustment and Loan Modifications Programs.

Earlier this year, the “cramdown” legislation, passed the Senate but not the House. The “cramdown” permitted bankruptcy judges to Mortgage Adjustment primary home loans; basically it gave them the authority to force the credit unions to do a Note Modifications. The reason it didn’t pass the House is that mortgage lenders promised they’d take care of the problem and help families avoid foreclosure through Loan Modifications.

So far, mortgage companies are not taking care of the problem and are far from the Governments expectations of providing Note Workout to homeowners. Too many homeowners that should be qualifying for the Note Modifications are still being denied. mortgage companies such as Bank of America are at the top of the list for not meeting Government expectations on banks. Remember, these financial institutions received millions of dollars of Troubled Asset Relief Program (TARP) money or easier to say, tax payers tax money that was implemented during the Bush Administration!

Those in the credit unions industry must understand that if there are not a significant number of Loan Modifications to stop this problem that there is a strong argument to revive the bankruptcy “cramdown” legislation. It seems extremely strong that the way the servicers are handle Loan Adjustment that it is not sufficient enough to handle the current problem. It will surely strengthen the comeback of the “cramdown” legislation and this time it would probably pass.

Last month many cities hits double digit marks for unemployment. This can only follow with elevating homes needing Loan Modifications to avoid foreclosure as unemployment correlates to the number of foreclosures.

In addition, seniors close to retirement have found that their retirement is gone, lost by Wall Street. Or they had to borrower from retirement to pay their mortgage because they couldn’t get a Note Adjustment. Some have even borrowed money from their credit cards and have racked up a significant amount of debt to just pay their mortgage.

Some homeowners have filed for bankruptcy to relieve themselves of all debt but their home loan so that they can qualify for a Loan Adjustment. If you plan on doing this make sure your Attorney carves the home out of the bankruptcy and that it is written clearly in the paperwork. In general, you will need that specific information from the Bankruptcy Attorney in order to qualify for a Mortgage Workout. Consulting with a Loan Modification Attorney and having them handle your loan modification would be the best bet to get your Mortgage Adjustment done correctly.