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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (101766)	9/9/2009 4:37:10 PM
From: Amark$p	Read Replies (1) of 116555

Mish, if you get time, would appreciate an article on mortgage cram downs and bankruptcy. mortgagenewsdaily.com How would such actions impact Total US Debt to GDP Ratio? Would assume such actions would be extremely deflationary to housing prices... Such actions would certainly reduce debt but at the risk of bankrupting the banks... _____________ BANKRUPTCY REVISION BILL THREATENED Lawmakers expressed frustration at the slow progress as unemployment-driven foreclosures rise and threatened to revive so-called "cram-down" legislation that would allow bankruptcy judges to reduce mortgage loan amounts owed. "I am disappointed at the pace of this program," said Rep. Barney Frank, chairman of the Financial Services Committee. The House last year passed a cram-down bill but it was defeated in the Senate, which at the time had a narrower Democratic majority. "The best lobbyists we have for getting bankruptcy legislation passed are the servicers who are not doing a very good job of modifying mortgages," said Frank. "If they do not improve their performance, then they improve the chances of that legislation." Barr said President Barack Obama supports the idea of allowing bankruptcy judges to alter mortgage terms, but "the first and best answer has got to be 'let's figure out a way of keeping people in their home with a modification' and that's where we're focused." A Federal Reserve economist, however, said that an effective plan to mitigate foreclosures must deal with rising unemployed borrowers. "Thirty one percent of an unemployed person's income is often nothing. And a payment of zero will never be attractive to a lender," Boston Federal Reserve Bank senior economist Paul Willen told the hearing.

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