Chapter 13 could be your lucky number

by Fran Smith on February 18, 2009 · 6 comments

in Bailout Watch, Economy, Odds & Ends

Today President Obama announced his homeowner bailout plan. While that plan will spend huge sums of money helping “renters” stay in homes they couldn’t afford and creating incentives for homeowners who don’t need handouts to get in the food lines, it stops at rewriting mortgage contracts. But that’s likely to come soon with the “Helping Families Save Their Homes in Bankruptcy Act of 2009.”

On a fast track now in both the House and the Senate, the legislation would allow homeowners in Chapter 13 bankruptcy reorganization plans to completely rewrite the terms of their mortgage contract –

–reduce the principal of their mortgages,

–lower the interest rate to the current fixed rate, and

–reset the term of the mortgages to 40 years less the time the mortgage was in effect.

The legislation would apply to all mortgages written before the measure is enacted.

Talk about incentives to declare bankruptcy – this legislation is an enticement. It’s likely that the already swamped bankruptcy courts will soon need their own bailout.

More importantly, consider what this legislation does to contracts. What a deal – two parties willingly sign a contract and one gets to rewrite it at will. Who says the number 13 is unlucky?

Ray Orbach February 19, 2009 at 4:49 am

I still don't understand why they just don't extend the life of the mortgages so that homeowners will pay less in their monthly payments. This new concept will foster anger and rebellion in the people who didn't go into foreclosure. People fail to take in to consideration the consequences of giving a helping hand to one group of people at the expense of another group. I personally believe that the overall moral fiber gets broken.

MajaC February 24, 2009 at 7:23 am

Bought my house for $160,000, 30 yr fixed at 5.875%, had paid $50,000 already, except $40,000 goes to the mortgage bank (the one we bailed out BOA) and only $10,000 went to my principal. I still owe $150,000 plus $140,000 more to the bank (the one we bailed out – Bank of America). Why is such a criminal system in existance in a supposebly FREE society? America, WE THE PEOPLE, have become slaves to the financial district of London (England has always been our enemy) through financial manipulations. I want my mortgage rewritten. My house is now worth $70,000 – $120,000. The banks have made enough. Any comments on my situation?

Bob Armstrong February 24, 2009 at 12:08 pm

Creditors and Debtors can always renegotiate any contract . They don't need 3rd party ( the state ) interference .

Comments on this entry are closed.

{ 1 trackback }

Previous post:

Next post: