Washington – Strapped homeowners would get a shot at saving their homes in bankruptcy under a controversial bill passed by the House as part of President Obama’s mortgage rescue plan.
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The bill, approved 234-191, would let judges “cram down” interest rates and the values of mortgages for homeowners forced into bankruptcy in hopes of keeping them of foreclosure.
Investors and the wealthy have long been able to renegotiate the value of second and third homes in bankruptcy.
Opponents said the measure will help irresponsible people, flood bankruptcy courts and cause banks to raise interest rates on other customers.
More than a dozen conservative Democrats opposed the measure, which could face rough sledding in the Senate.
“we are the government, we are here to help”
There is no reason why investors should be able to force changes in their loan payments, while ordinary homeowners can’t. This is an example of where the Republican minority is completely out of touch.
Usually Investors and the Wealthy CAN NOT change the loan principal without having acquired a significant amount of standing equity. The calculations are made with various other assets plus interest and principal already paid.
Someone who bought a house they couldn’t afford with an interest only mortgage HAS NO equity to negotiate with – and with a house whose value was cut by half – who ‘eats’ the loss (we the responsible taxpayer) and we DO NOT get anything in return.
Foreclosures are better.
This is the craziest thing I have ever heard. They think there are 4 million homes in potential forclosure. After this there will be 40 MILLION PLUS!
Why should people work hard to continue paying their mortgages, if they are guaranteed not to loose their home anyway! Pure craziness! Anybody who has money, run from this country before it get’s taken from you or from the bank you invested in.