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Bill HR 1106 BK13


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The House passed the bill mostly on party lines. Dems voted for it, Reps against.

As for the Senate, this bill has little chance of passing there. The balance of power is not sufficient for the Dems to get around procedural blocks the Reps can put up. You also will find the banking lobbyists working like mad to prevent this from passing.

And, of course, if it doesn't get past the Senate it will never go to Obama to be signed into law.

There would have to be a HUGE shift in the Republican party's stand on this before it stood a chance to pass.

Also you have to think about this: What about the people that are paying their mortgae current even if they are in a negative equity situation on the house? Is it fair that they not get an adjustment too?

The truth is so many people are facing negative equity that passing this law would cause another problem with our economy as hundreds of thousands of people file BK13 to reduce their liabilities even if they don't have to. This puts a new round of pressure on lenders and more bailouts from the government to keep them capitalized...which eventually translates to more taxes and larger deficits.

It becomes a numbers game. People may deliberately quit jobs so as to position themselves for a BK13 reduction on their mortgages....Just as right now a large number of people are walking away from houses they can still pay for because the numbers don't make sense to keep an upside down property.

As much as I hate to say it, this is a bad law. If it was part of the BK code for years then it would have been a buffer to prevent the current mortgage mess from building up to an avalanche. But implementing it now would be like tossing a stick of dynamite into a snowbank at the top of a mountain of snow...it would all come crashing down and crush those underneath.

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I've written a lot about this as have others over the past 6 months on this site. I'm sure a quick search will pull up at least a few threads. I agree that it is a very bad idea to modify Chapter 13 to allow residential mortgages to be modified by judges. There was reliance on the rule of law in place when these mortgages were funded. Now we'll retroactively modify the law that these contracts relied on when they were funded? Bad bad policy.

There is plenty of good public policy NOT to allow modifications on residential mortgages. Certainly there is an emotional counterargument, but the problems created by modifying Chapter 13 law strongly outweigh it.

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