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Obama/Biden: When the Judge Becomes Your Mortgage Broker
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by Bill Hitchcock | October 7, 2008 at 05:47 am
528 views | 7 Recommendations | 4 comments
Obama/Biden: When the Judge Becomes Your Mortgage Broker By: Bill Hitchcock From the Palin/Biden Vice Presidential debates on October 2, 2008 Biden:”Number two, with regard to bankruptcy now, Gwen, what we should be doing now — and Barack Obama and I support it — we should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you’re paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe, the principal that you owe.”
The Obama/Biden web site States: “Obama and Biden will work to eliminate the provision that prevents bankruptcy courts from modifying an individual’s mortgage payments.” Absolutely incredible! A Judge, acting on his own free will would be able to determine the mortgage interest rate and the principle amount owed by a defaulted borrower. Do you realize how dangerous this is? A judge allowed to reduce the interest rate and to reduce the principle of a mortgage loan. The potential problem this creates is in encouraging folks to not pay their mortgage bill and file bankruptcy. Why not-It becomes a viable option. Just have the judge lower your rate and reduce the amount of monies owed. Is this even constitutional? According to the website USCourts.gov, “Bankruptcy laws help people who can no longer pay their creditors get a fresh start by liquidating their assets to pay their debts, or by creating a repayment plan”. Bankruptcy Courts liquidate. They do not restructure loans, refinance into new interest rates and do not create a new principle balance owed. What qualifications does a judge have to act as a mortgage broker? This goes beyond being a “cramdown”., which is a forced restructuring/reorganization of a loan against the will of the creditor. This becomes a viable option for refinancing. It encourages people to get into loans that they know that they can’t afford. This also perpetuates the mortgage lending crisis. Too much money being lent to too bad of a risk and millions and billions of dollars will be lost.
The Obama/Biden web site States: “Obama and Biden will work to eliminate the provision that prevents bankruptcy courts from modifying an individual’s mortgage payments.” Absolutely incredible! A Judge, acting on his own free will would be able to determine the mortgage interest rate and the principle amount owed by a defaulted borrower. Do you realize how dangerous this is? A judge allowed to reduce the interest rate and to reduce the principle of a mortgage loan. The potential problem this creates is in encouraging folks to not pay their mortgage bill and file bankruptcy. Why not-It becomes a viable option. Just have the judge lower your rate and reduce the amount of monies owed. Is this even constitutional? According to the website USCourts.gov, “Bankruptcy laws help people who can no longer pay their creditors get a fresh start by liquidating their assets to pay their debts, or by creating a repayment plan”. Bankruptcy Courts liquidate. They do not restructure loans, refinance into new interest rates and do not create a new principle balance owed. What qualifications does a judge have to act as a mortgage broker? This goes beyond being a “cramdown”., which is a forced restructuring/reorganization of a loan against the will of the creditor. This becomes a viable option for refinancing. It encourages people to get into loans that they know that they can’t afford. This also perpetuates the mortgage lending crisis. Too much money being lent to too bad of a risk and millions and billions of dollars will be lost.
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Most RecentMost Recommended Comments (4)
at 07:49 on October 7th, 2008
Bill Hitchcock, I like this story. It's good stuff.
really scary... I hope they change their mind about that...
at 10:12 on October 7th, 2008
Bill Hitchcock, I like this story. It's good stuff.
This idea is retarded. What bank would lend a single dollar to anyone in that environment? Nevermind the poor not getting mortgages. No one would get a mortgage......no one!
at 11:04 on October 7th, 2008
Banks lend money to people in that environment every day.
Credit card debt, auto loan debt, personal loans. The terms of all of these can be reset by a judge in bankruptcy court. It might even tempt the mortgage brokers to better vett who they are making mortgages to - and decrease the chance the taxpayers will have to bail them out later.
at 13:28 on October 7th, 2008
This is very different. If this happens watch for shares in all US bank stocks and those with significant US portfolio loans to plummet!