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View Diary: UPDATED!! Urgent: House to Consider New Cramdown Legislation This Week (110 comments)

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  •  shanikka (5+ / 0-)

    you are right that the cramdown legislation will indeed be targeted and implemented in such a way as to ensure that the relief goes to those who need it the most.

    The kicker is, cramdown is already allowed for certain types of consumer debt -- but not primary homes.

    Which means, bizarrely enough, our laws give breathing space to those who can afford second homes but not  not for those who can only afford a single mortgage.  As Alexi explained in one of his cramdown diaries:

    Currently, judges can modify or "cram-down" the terms of most types of consumer debt, including vacation homes and other residential mortgages, but not that of primary homes. Yet making changes that include primary homes would give mortgage holders an incentive to work with borrowers in good faith and alter the terms of their loans before they are forced into bankruptcy. The goal was to keep more families in their homes while housing prices return to normal levels, stabilize local communities threatened by record rates of foreclosure, and strengthen our overall economy.

    •  Cramdowns are allowed in business bankruptcy (3+ / 0-)
      Recommended by:
      RunawayRose, route66, Christy1947

      Frankly, permitting cramdowns is the norm in bankruptcy. Primary residences are the exception. All this legislation does is bring them under the same sort of rules that other property falls under.

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