Cramdown

This is just more protection of the status quo funded by mortgage and credit lobbyists.Local banks are who take the brunt of the damage, not them.When the dust clears the bottomed out property values will actually benefit the big corporations who can then come back and buy it all back up for less than what they originaly paid for it.They will start turning big profits in a year or two when they buy everything back up after local banks have failed or can’t afford it.By preventing people from staying in their homes at a lower value, they are setting themselves up to buy it back and make big profits in the near future.Thats my view on it anyway.

I agree Bob, it only makes sense if you are in the pocket of the bankers.Deeply troubling and depressing on all counts.

As we’ve learned to our cost, the banks don’t always work in their own best interests. Their reaction to the cramdown legislation reminds me of the record labels reacting to Napster: instead of embracing the change to their business models, they went ape-shit and filed lawsuits.

I agree with J M’s assessment. They don’t want the people to stay and pay. They plan on making large profits when things turn around. It’s the typical corporatist screw them now, screw them again two years from now.Senator Tester is wholly owned and operated by Very Big Corporations Of America. He does not represent the people. In this case he didn’t even pretend to represent the people.See these people for what they are. They are our enemy when they take the side of corporations over the welfare of the people.

Not really. Some banks are actually foreclosing on homes, then buying them back at auction for a much lesser value:http://intoxination.net/jamie/stopping-lies-about-foreclosures

Good article Jamie. Thanks.I always knew that Santelli’s characterization of foreclosed homeowners as losers was a piece of evil propaganda but so little has been done to show the real story.Lot’s of Senators just revealed who their real constituents are.

If ruining our economy wasn’t enough to warrant the firings of the bank execs by the Treasury Department, I think this episode might. After that it sounds like it’s time to fire a bunch of fucking senators too. I think the weasel Dems who voted with the Repubes on this need to be challenged in the primaries. If there was ever an opportunity to challenge a deeply entrenched Republican senator, this is a dandy one.

I am very sorry this legislation did not pass. I do think it could have helped a lot of people..Been in real estate for a long time but in commercial real estate so not really familiar with all the ins and outs of home mortgages. Also sold and leased foreclosed properties after S&L crises. And I own rental homes..Speculation based on my experience:.I think there may be many reasons the banks didn’t want this. Biggest one is they will lose money on most of the foreclosed homes and the longer they have to futz with it, the more they will lose. To go through a court renegotiation process could take a long time. In many instances they save money auctioning them off fast for next to nothing versus trying to recoup the mortgage value (which is unlikely anyway for most foreclosed homes) or paying lawyers to deal with court renegotiation..They also know that many of these loans were poor credit risks to begin with and renegotiation will just delay the inevitable. Unbelievable that after the S&L crises this lending fiasco was allowed to happen..I disagree that the banks are thinking they will make money by defeating this legislation. I think they are doing it because they will lose less. And then they will go on to making profits as the market recovers..I may just not have the information, but I am not aware of big corporations owning single family homes. In my experience big corporation buy office buildings, apartment buildings, shopping centers and other large properties but not single family homes. A lot of individual speculators bought homes after watching shows like “Flip This House”. Many of them are walking away from them..There will be people who profit from the foreclosed homes. I think it will be individual investors, people buying one of them to live in, or very small investment groups. I also think a lot of houses may end up being bulldozed..Perhaps some big corporation will see a way to profit by buying up foreclosed homes. But I think it more likely that they will buy up foreclosed commercial properties and foreclosed raw land.

Didn’t I hear somewhere that if you own two homes, you can have the court renegotiate the mortgage on your second? I think when I heard that it was said if you are rich and own more than one home, you can get help keeping that second, but if you are the average American with one home, fuck off. I guess “A deal’s a deal” doesn’t apply to your second home in the Hamptons.This whole thing really just once again brings to the fore how much of a failure our leadership has been. I don’t want Dems to become mirrors of the Republicans and just vote in lockstep, but Hell, those two bozos in charge can’t keep that herd of scared kitties together through anything. And I’m beginning to believe they’re just fine with that. It almost seems as if they have a “well, we put it before a vote and better luck next time” attitude about the whole thing. They’re not fighting for anything and often seems more than amiable when it comes to accommodating the Fake Democrats like that fucktard Nelson.

Slightly off-topic, but I find it dosconcerting that through all of this housing crisis meltdown extravaganza, not once, NOT ONCE, have I heard one disparaging remark about Realtors.Having been a mortgage banker for nearly 5 years (through the boom and the fall) the first thing you learn as a retail loan officer is that the only way you will get business is to schmooze realtors. The realtor is (9 times out of 10) the first point of contact in a purchase transaction relationship, and mortgage peeps bend over backwards to scoop those referrals.What ends up happening, instead, is collusion. The realtor assembles his/her Dream Team of title/escrow officer, lender, and appraiser – knowing that all 3 depend wholly on the Realtor’s refferal(s). So then, when the client meets with the mortgage guy, and he instantly realizes that they are buying too much house, or overpaying, or being b amboozled in any way, the mortgage guy is faced with the very real decision of zipping his lip to get the deal done so that his kids can eat next month too, or blowing the whistle and never seeing another realtor referral again.Like I said, I was in the mortgage biz…

Some banks are actually foreclosing on homes, then buying them back at auction for a much lesser valueJamie – I don’t know if this is always the case, but when my house was foreclosed & sold at auction, the bank placed a bid on it. It was explained to me that the banks bid the amount due on the mortgage so that if someone bids higher, they are ensured of getting the mortgage amount.

“But what I’m still trying to figure out is this: Isn’t it better for both the homeowners and the mortgage banks if a judge is allowed to renegotiate the mortgage terms?”In a single instance, yes that may be the case. The problem is with the thousands and thousands of other mortgage holders that might be tempted to stop making their payments and declare bankruptcy if they know they could come out of the deal ahead. I myself would be in that same situation. I’m upside down in my mortgage, struggling with all the bills, but I’m still current. But, I’m also paying way more each month for that mortgage, and have little chance of getting “even” with home values vs loan balance, even though I put $150,000 down and have been paying for years on my home. If I knew I could stop making payments, and that the bank would let me stay in my home for 9-10 months without paying a dime, I could declare bankruptcy and get my mortgage reduced, maybe even the loan balance dropped to market value, well hell, that’s quite tempting. I would still be in my home and I would have saved tens of thousands of dollars, and got a much lower payment too. I would be much further ahead by not making the payments than by making them, thereby making bankrupcy & foreclosure more attractive. It would be off my credit report in a few years, but I would have a clean slate right now, and still have my house. Of course, there might be hundreds of thousands of other folks that would want to do the same, pulling more and more people into the the bankruptcy and foreclosure route. This is the unintended problem could be created, which is sad but true.

I clicked over to this site to take a break from being shoulders-deep in studying for my Property Law final, funnily enough.Bob – Your analysis seems spot on to me. I think some of the fear of putting this kind of stuff in judges’ hands is that the law in this area varies so wildly across jurisdictions, meaning they’re hesitant to institute a nationwide policy that would give different people very different results. Plus there’s the typical, hypocritical claims of ‘judicial activism,’ etc. No word yet on why it’s okay for the political branches of govt to interfere w/ private contracts, but not for the judiciary to act as a mediator, and provide a forum for all sides to achieve a mutually beneficial result. It sure seems a lot better than the alternative to me.ceu & Jamie – Banks may take either approach you’ve mentioned. The approach that they take depends on a ton of factors, such as whether there are any other bidders, and the foreclosure type (judicial v. power of sale). The law in this area also varies a TON depending on where you live, so that has a lot to do with it as well. For example, in some jurisdictions, the mortgage lender isn’t actually allowed to bid on the house.The one thing that is really consistent is that the only restrictions on the mortgage lender are that he 1) must use “due diligence” to get a fair price (though this rarely translates to what the house is actually worth on the open market), and 2) they must act in “good faith.” What this basically translates to is that if it’s in their best interest to buy the house cheap, they can do so. As long as the price isn’t so wildly unfair as to make a judge say – “Holy shit guys, seriously?”….a court’s probably not gonna interfere. It’s a very lax standard.

When the ‘deal’ in question is a crime of omission or misrepresentation with a party wholly unqualified to understand the terms, and who’s in a high-pressure situation, that’s not a ‘deal’, it’s robbery. Your elected representative Tester just told you to piss off.

Bottom line: those mortgage losses are already written off the books. It’s a loss. It’s done. Over. History. So why do they still act as if those mortgages are still on the books as being owed?