foreclosure and bankruptcy laws
Instead of spending billions on bailouts, why not let bankruptcy court fix bad mortgages ?
Under existing law, bankruptcy courts cannot modify the terms of home mortgages. To keep her home, this debtor needed to demonstrate sufficient income not only to make her ongoing payments but also to cover the payments she had defaulted on. Her proposed plan was clearly not feasible based on her salary, so I had no choice but to lift the stay and allow the foreclosure to continue.
Homeowners are the only ones who cannot modify the terms of their secured debts in bankruptcy. Corporate America flocks to bankruptcy courts to do precisely this – to restructure and reamortize loans whose conditions they find onerous or can no longer meet.
http://news.yahoo.com/s/csm/20081202/cm_csm/yleonard;_ylt=AuL35xU5WKDvuxDVeR9jFD39wxIF
Personally, I think the only parties that should be able to modify the agreements of a mortgage are the lender and the borrower. I don’t think the government has the right (either through legislation or court judgments) to change an agreement like that – that goes for personal or commercial loans. BUT since this is allowed on the commercial level, the same should be allowed for the individual.
It seems that it would be in the best interest of these mortgage companies to go ahead and rework alot of these loans – it’s better to get something than to get nothing right? But I’m afraid all the mixed signals and lack of direction on the part of the government are providing no incentive for banks to do this…..
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