It's a controversial subject but one on the "fast track" to passage. It's mortgage "cram downs."
Cramdown means a court can tell a lender: Your borrower may owe you $200,000 on the house, but the property is only worth $100,000 in today's real estate market, so that's all you're owed from here on in.
To qualify for relief, the homeowner "will need to file for Chapter 13 bankruptcy, agree to a court-supervised household expenditures plan for up to five years, and make at least partial repayments on debts to their creditors. "
Though the final version of the legislation still must be negotiated between House and Senate, it's likely it will come with three key features:
First, only mortgages closed prior to the date of enactment will be covered.Second, all delinquent borrowers will need to contact their lenders and inform them of their intention to file for bankruptcy. That will allow lenders to put together their best offer -- including a reduction of the amount owed and the interest rate -- before the borrower actually files.
And finally, if there is an increase in the value of the house during the five year bankruptcy period, the lender will be owed some portion of it.
Read the full report here.
Tel 201-656-9220. Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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