Recent Updates
April 28, 2010
State Must Prove Defendant's Knowledge of Driver's License Suspension
April 13, 2010
Sentencing Commission Votes to Eliminate Recent Criminal History Points
October 15, 2009
Consent to search inside of vehicle does not extend to locked containers
October 14, 2009
Making phone calls to get drugs for personal use not a felony
October 07, 2009
Duval County schools agree to reduce number of students getting arrested
BANKRUPTCY MAY SOON ALLOW REDUCTIONS IN PRINCIPAL ON HOMES
January 07, 2009
Topic: Bankruptcy
Under a Chapter 13 filing, the Bankruptcy Code allows that many obligations including car loans and second mortgages on homes can be reduced or sometimes eliminated (for mortgages) from a debtor's obligations if the value of the assets is less than the value of the loan on the asset. On January 6, Senator Dick Durbin and Representative John Conyers introduced new legislation titled "Helping Families Save Their Homes In Bankruptcy Act of 2009" which will allow bankruptcy judges to do the same thing on first mortgages on residences.
This legislation, if passed, will allow Bankruptcy Judges to modify the mortgages on residential real estate, a practice which the current prohibits. This measure has been attempted several times in the past, including during the 2008 TARP hearings. Going into those hearings, President-elect Obama stated that he would support the change in the modification laws. In the end, Obama backed off and the result was it was not included in the otherwise disatorous TARP bill's final form.
Since October 2008, the economy has worsen so much that hopefully things will now change for the sake of our clients. With the Democrats in firm control and Obama hopefully still in favor of these changes, this could dramatically improve the lives of many people and help put a floor into the housing market by ending the out of the control foreclosures.
Subprime mortgages and other "troubled assets" which led to the credit crunch are now being sold by the governement to private mortgage holders, in some cases for between 30 to 50 cents on the dollar. The recently formed Private National Mortgage Acceptance Company, LLC, is ironically headed by Stanford Kulrand, the former number two person has Countrywide, one of the companies at the forefront of the housing bubble that was recently taken over by Bank of America.
The money being given to the banks through the TARP is merely a financing by the American taxpayer to prop up the banks. Instances of consumer fraud is very rare in bankrutpcy and the great majority of persons who bought houses did so with the understanding that the houses would maintain their value. However, more importantly, the banks made the sale of the house with the same assumption. Therefore, the banks are as much as fault for the housing crunch as is the consumer.
Finally, the cost of foreclosure is huge. The banks fees, attorneys fees, court costs, costs of the auction are large, but the homes sell for much less than they would under a normal sell. This leads to a depreciation in vaule of everyone's home. This causes even persons who are doing well to spend less because they feel they are worth less today than 18 months before. Decreases in consumer spending leads to a slow down in the economy, people lose their jobs, their house ends up in foreclosure, and the cycle starts all over.
Hopefully this time Congress will pass the legislation, even if it has a sunset provision, which means it is good only for a certain time. If this legislation passes and mortgages are reworked to reasonable levels, when the market turns up within the next couple of years, persons will be able to accumlate equity in their homes and start to build net worth again.
Please encourage your local Congressman or Senator to support this important legislation.
