Modifying Mortgages in Chapter 13 - Fear Law Group, P.C.
Taking away “real” value. What real value? There is no real value there to support many of these loans. Durbin’s bill would allow the Court to put a “real” value on the house (not some inflated value by an appraiser who is a friend of the loan broker) and then allow the court to fix reasonable terms for the mortgage. If this bill is not passed, most of the homes that would have been saved will go to foreclosure. Quere, Mr. Mason: what do you think the “real” value will be when 25-50% of real estate listings are REO (listed by bank after foreclosure)?
1. Bankruptcy is a last resort. Nobody wants to file bankruptcy. So only those who are most desparate for the relief will file, thus limiting the number of people taking advantage of this relief.
2. Bankruptcy provides a built-in mechanism to determine if people should be eligible for the relief of modifying the loan. There is no better mechanism out there for determining what people should qualify for a modified loan.
4. A Chapter 13 plan takes a lot of doing to finish. Debtors would have to comply with every provision and make every payment on time for 5 years to get the relief of a modified loan. Anything else would result in dismissal of the case and vitiation of the relief requested.
The Durbin bill makes a lot of sense. We will see if it gets enough traction in Congress.