Today, the Senate defeated the proposal to let bankruptcy judges unilaterally change the terms of mortgages to keep people in their houses. It’s also a defeat for some people trying to keep a roof over their head through a bankruptcy.
This is a huge victory for banks. Now they don’t have to worry that judges will take away their right to seize homes when in default.
The idea of the cram-down legislation was that judges would be able to change loan terms and cut the principal on a mortgage to a property’s current market value. The entire industry, other than Citigroup, cried murder over this proposal.
Don’t be surprised if the deal the banks get from “the market” is even worse than what they would have gotten from the judges.
Tags: bankruptcy, foreclosure, short sale, short sales
