You can read more about
cramdowns in Colorado Springs bankruptcy attorney Bob Doig's blog article.
7) Whatever one thinks about
mortgage cramdowns (I can see both sides), they will have a negative effect on bank solvency, and the solvency of those who hold non-Fannie and Freddie mortgage backed - securities.
With big banks hugely unpopular, the key opponents
of cramdown were the nation's community bankers, who argued that the law would force them to raise mortgage rates to cover the potential losses.
I favor
cramdowns for now, because it can be a win - win for the borrowers and banks.
Last week, the Second Circuit established an «efficient market» - based approach for calculating
cramdown interest rates.
«We got the impression this was an issue [the White House] would not go to the mat for as they did with health care reform,» said Bill Hampel, chief economist for the Credit Union National Association, which
opposed cramdown and participated in Senate negotiations on the issue.
Community banks are blasting the proposal from state AGs and federal regulators as
stealth cramdown legislation.
I get complaints that some of my blog pictures are, well, crude, so in lieu of a crude
bankruptcy cramdown picture, I selected a nice one of me.
What if the possibility of
future cramdowns lead mortgage rates to rise, in order to account for the risk?
In a previous article, Losing Momentive: A Roadmap to Higher Cramdown Interest Rates, we explored how the
judicial cramdown interest rate cap was not gaining widespread traction as feared by many in response to the 2014 Momentive bench ruling upheld in a 2015 decision by the District Court for the...
It seems clear that some sort of novel solution is needed to help solve this problem and cure the ailing housing market (n.b. the not - so - novel solution of reforming the bankruptcy code in order to allow
mortgage cramdowns would be effective).
Democratic leaders offered to exempt the politically popular smaller banks from
the cramdown law, but no deal was reached.
During bankruptcy proceedings, a judge may issue a «
cramdown» which lowers the amount of the debt that you owe to a creditor.
A cramdown is what it is called when the Bankruptcy Court reduces the amount owed on a secured claim so that it is equal to the value of the property to which it is secured.
4) I never did all that much with
the cramdown that the Obama administration did with Chrysler secured creditors.
I favor
cramdowns for now, becauseLike the recently departed Tanta at Calculated Risk, I also favor the concept of cramdowns in mortgage foreclosure proceedings.
The cramdowns cram immediate losses onto the banks.