Looks like the economy is bad shape to say the least. The President, Presidential-Hopefuls and members of Congress all pay lip service to this $700 billion Wall Street bailout, helping the little guy. However, this bailout as it currently stands does nothing to help the homeowner with a loan in or facing foreclosure. People in this situation can not refinance their mortgage and the housing market is so depressed and devalued the stressed and over extended homeowner can not sell their home. What is needed is the ability of the Bankruptcy Courts to restructure primary residential loans in a Chapter 13 Bankruptcy. The Court needs the ability to rewrite the terms of these bad and unaffordable loans. The ability of the Courts to restructure the loans will greatly increase the likelihood of repayment. Court supervised restructuring of primary residential home loans is the only way to truly help the little guy in this bailout. The ability for the Bankruptcy Courts to rewrite primary residential mortgages will not only help the little guy, but also Wall Street and soon all tax payers when the government buys all these loans. How, you may ask? With more people repaying their loans instead of turning in the keys fewer homes will be foreclosed. Thus, with a lower number of homes on the market for sale hopefully the property values will begin to trend upward.
I am a member of the National Association of Consumer Bankruptcy Attorneys, below are key points they are trying to stress to law makers who are today considering this Wall Street bailout. Why should a Wall Street CEO be able to restructure their vacation home’s mortgage in Bankruptcy, but the guy on Main Street is not able to restructure the loan on his primary residence. This is against public policy and makes no sense to many Americans facing the loss of their home. Without the ability of the courts to restructure these bad loans more and more families are truly going to be on Main or some other street. Please call, fax or email your members of the House and Senate and urge them to support a court-supervised mortgage restructuring amendment in the Wall Street bailout bill.
* The rapid deterioration of the financial sector has been fueled by the steep rise in delinquencies and foreclosures of risky mortgages.
* These mortgages have been sliced up and sold in complex financial instruments that now sit as "toxic assets? on the balance sheets of our largest banks.
* Every financial expert, including Treasury Secretary Paulson and Federal Reserve Chairman Bernanke, agree that we will not stabilize our financial markets until we stabilize the housing markets.
* The housing market will not stabilize absent a solution to the tide of foreclosures.
* Simply giving a government entity the authority to purchase the "toxic assets? of troubled financial institutions will not result in fewer foreclosures. This is complicated, but the basic problem is that the government will not be buying mortgages ...those mortgages have been carved up and sold to investors all over the world. The government essentially would have to put all the pieces back together to modify the loan, which just is unrealistic.
* Court-supervised mortgage modification in Chapter 13 bankruptcy is perhaps the most effective tool for ending the foreclosure crisis.
* Court -supervised mortgage modification will not cost the U.S. taxpayer one penny, but will keep families on Main Street in their homes. It deserves your support in the taxpayer funded bailout of Wall Street.
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