Bankruptcy Cramdown back in House with modifications…Vote expected Thursday

This is the part I hate the most, where they do the stupid thing anyway but simultaneously  are SO WEAK, that the final post-lobby legislation still does the ‘bad thing’ without having a meaningful impact on the goal the politicians claim they are trying to accomplish.

Now there will still be cramdowns, but cramdowns that get paid back years later if the person sells.

Way to make it more opaque and confuse accounting for derivatives purposes team!

So weak.  PS This is almost exactly McCains plan but he didnt want judicial cramdown, it was lenders doing this for all borrowers and with a simple one page form to refi picked up at the Post Office, and the ‘temporary principal’ writedown paid off at resale of home.

WaPo (ugh):

House Democrats have reached an agreement to narrow the impact of legislation allowing bankruptcy judges to modify troubled mortgages.

Under the current version of the legislation, a bankruptcy judge could cut the principal balance of a homeowner’s mortgage, lower the interest rate and extend the terms.

But after moderate Democrats raised objections last week, delaying a vote, Democratic leaders agreed to insert some restrictions, according to a letter circulated by some moderate Democrats in support of the legislation yesterday.

The compromise version, for example, requires that a homeowner share with the lender any profit from the eventual sale of the home if a bankruptcy judge lowers the principal balance. It also gives preference to lowering a homeowner’s interest rate over cutting the principal balance.

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March 4, 2009. Tags: , , , , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Politics. 3 comments.

Barney Frank new TARP legislation…REAL Help for Homeowners-FINALLY!

View full presser on CSPAN here

From Bloomberg:

House Financial Services Committee Chairman Barney Frank today proposed legislation setting terms for releasing the remaining $350 billion of financial-rescue funds, seeking as much as $100 billion to stem foreclosures.

Frank’s measure, reflecting lawmakers’ criticism over how the first half of the $700 billion rescue fund was used by President George W. Bush, would require President-elect Barack Obama’s Treasury Department to develop a foreclosure-prevention plan by March 15 and put it in place by April 1.

From the legislation, H.R. 384, the highlights from the FT:

Among the proposals: tougher executive compensation restrictions on companies accepting Tarp funds and bans on corporate jets and other perks.

“[What] I’m going to tell the banks is, ‘look, you don’t like these [conditions] but would you rather have no $350bn?’ ” Mr Frank told reporters.

The bill would also widen access to the remaining $350bn of Tarp funds beyond the big Wall Street institutions that dominated the first tranche.

A “significant” share would be directed at homeowners facing foreclosure, while local governments, real estate companies and car dealers would also receive help.

January 10, 2009. Tags: , , , , , , , , , , , . Economy, FDIC, Finance, Foreclosures, Hillary Clinton, Housing, Obama Administration, Politics, TARP, Unemployment Statistics, Wall St. 2 comments.

Citigroup and Senate Dems reach a deal on mortgage modification by bankruptcy judges…

housinginyourhands

WOW!!! This will send shock waves through the Mortgage Bankers Association which successfully lobbied against this provision in legislation passed last year….

From MarketWatch:

Senate Democrats have reached an agreement with Citigroup Inc. on a key bill to give bankruptcy judges the authority to eliminate some mortgage debt and help reduce foreclosures, lawmakers announced Thursday afternoon. (MiM here-Bolded by the news report HA! Yeah you betcha they’re wiggin out over this one!)

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January 8, 2009. Tags: , , , , , , , , , , , , , , , , , , , , , . CITI, citigroup, Economy, FDIC, Finance, Foreclosures, Housing, Obama Administration, Politics, TARP, Wall St. 1 comment.

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