Real Estate Forums

SEOWolf · 03-17-2008, 10:53 PM

Rhonda has released part 2 of her mini-series in her real estate blog of harmful Bills pending that do far more harm than good to the Consumer, the real estate industry and the economy.

Sen. Hillary Clinton and Sen. Barack Obama have both cosponsored S.2136 that in summary state:

Quote:

10/3/2007--Introduced.
Helping Families Save Their Homes in Bankruptcy Act of 2007 - Amends federal bankruptcy law to permit a bankruptcy plan to: (1) modify a loan secured by the principal residence (mortgage) of a chapter 13 debtor (individual with regular income); and (2) provide for payment of such loan at a fixed annual percentage rate of interest, over a 30-year period.
Exempts a chapter 13 debtor from the requirement for credit counseling if the court receives certification that debtor's principal residence has been scheduled for a foreclosure sale.
Conditions any fees, costs, or charges that may be added to the mortgage debt during pendency of the bankruptcy case upon notice to the court within a specified deadline.
Requires the court to waive such additional fees, costs, or charges if the court has not been notified on time.
Permits a bankruptcy plan to provide for waiver of any prepayment penalty contained on a claim secured by debtor's principal residence.
Authorizes the trustee in bankruptcy to request joinder or substitution for the debtor as the real party in interest in any action in state or federal court with respect to a claim or defense asserted by an individual debtor that was not scheduled in the debtor's petition. Permits the debtor to proceed as the real party in interest if the trustee does not make such a request.
Amends the judicial code to authorize the court in any core proceeding under bankruptcy law to hear and determine a proceeding in lieu of referral to arbitration if the case involves an individual debtor whose debts are primarily consumer debts.
Exempts from the estate in bankruptcy up to $75,000 of the debtor's aggregate interest in real property used as debtor's principal residence if the debtor is age 55 or older.
Prohibits the court from allowing a claim that is subject to any remedy for damages or rescission due to failure to comply with the Truth in Lending Act or any other state or federal consumer protection law.

Now I wish I could report that the “Stupid” sign was above the left side of the isle exclusively but it was not. Sen. Arlen Specter [R-PA] sponsored S.2133 Home Owners' Mortgage and Equity Savings Act. This Bill goes even further than S.2136:

Quote:

10/3/2007--Introduced.
Home Owners' Mortgage and Equity Savings Act, or the HOMES Act - Amends federal bankruptcy law governing mortgage loans to authorize modification of a mortgage agreed to in writing by a debtor meeting specified requirements and the holder of a claim secured by an interest in real property initiated before September 26, 2007, that is the debtor's principal residence.
Allows the principal amount of such a mortgage loan to be lowered to the fair market value, if less than such amount, of the real property securing the loan at the time of the submission of the debtor's plan for the payment of debts. Permits waiver of otherwise applicable early repayment or prepayment penalties. Permits, also, prohibition of, delay in, or voiding of any adjustments to the rate of interest in the case of an adjustable rate mortgage.
Permits the bankruptcy court, in the case of a chapter 13 debtor (individual with regular income), to consider certain interest, late fees, or other fees to be a voidable transfer if the court finds there was a substantial failure to disclose material terms regarding such interest or fees related to a mortgage claim.
Authorizes delay of the prerequisite that debtor obtain counseling from an approved credit counseling agency before filing the petition in bankruptcy, if the debtor submits to the court a certification that the holder of a claim secured by the debtor's principal residence has initiated foreclosure on that residence.
Directs the Comptroller General to study and report to Congress on the impact of allowing bankruptcy judges to restructure principal residence mortgages on the secondary market for mortgages.

Either Bill would have a devastating effect on the real estate industry. You would see an immediate tightening of credit along with considerably larger down payments becoming mandatory.

I find it difficult to believe that our legislative branch would propose such poorly planned Bills without consulting real estate industry experts and economist but they obviously have NOT bothered doing their home work.

I will let you know what Rhonda comes up with in Part 3 of her real estate blog mini-series.

~Mack

Bigtoe · 03-18-2008, 06:53 AM

As if loans weren't hard enough to get as it is. Put all the risk on the lenders and they will find something else to do with their money.

Hopefully this is just election talk and it will go away in December.

SEOWolf · 03-18-2008, 03:15 PM

Quote:

Originally Posted by Bigtoe

As if loans weren't hard enough to get as it is. Put all the risk on the lenders and they will find something else to do with their money.

Hopefully this is just election talk and it will go away in December.

Bigtoe loans are getting harder to get everyday and you are right, why would a lender take the chance on eating a major percentage of a mortgage if these Bills become laws.

Markets such as Las Vegas that have seen housing figures drop substantially over the last two years could possible see a Bankruptcy Judge reduce the mortgage from $300k to $200K while reducing interest rates and increasing the loan duration from 20 years to 30 years.

Who in their right minds would take such a gamble?

~Mack

Jim B · 03-19-2008, 08:04 PM

I was talking with a commercial lender today who told me that in the last 4 months his firm has gone from prime + 0 to prime + 2 to Tuesday when the fed cut rates 3/4 of a percent that firm raised their rate to prime + 4.25%.

Somehow I do not think this is what the Fed intended. So instead of the Feds actions on Tuesday helping, this bank and others are trying to take the economy down.

I think that the Fed should have the selective ability to punish institutions that activly work against the Fed, get their overnight borrowing rate raised as much as the lending institution is trying to pass on to the consumer.

How is this economy supposed to get better when the banks don't really want to lend???

San Diego Real Estate · 03-20-2008, 05:39 AM

Folks,

Like I mentioned on the Obama thread about the Client with a Full doc Loan with 780 Fico with 30 months reserves and 10% down getting declined by the lender on a second. How do you spell OUCH!!!

Let me tell you if the Feds keep this up we will all be scrambling to find not only another career but you might want to consider updating your passports.

The Feds have to get their acts together quick or you are going to see a lot more fall out IMHO. This Mortgage issue has to be adressed ASAP!!! Its time they get their heads out of the sand and take the necessary actions to get our financial world back on stable ground!

SEOWolf · 04-06-2008, 02:38 PM

Quote:

Originally Posted by Jim B

How is this economy supposed to get better when the banks don't really want to lend???

Jim the economy will only get worse as credit tightens.

That is what is so scary about some of this proposed legislation. If anything even close to what is proposed is passed into law it will be almost impossible to get a home loan. Especially in markets that have enjoyed higher than normal rates of appreciation in recent years.

The Housing industry has a significant impact on the overall economy as we have all seen this past year. When the housing industry stubs its toe the rest of the economy gets a nose bleed.

When homes stop selling so do cars, appliances, clothing, textiles and even vacation accommodations. It affects everything.

So when the government starts proposing legislation like this I almost want to apply for food stamps and beat the rush.

~Mack

Bigtoe · 04-08-2008, 07:56 AM

Thankfully, it is election year. Every election year the crusaders stick their heads out from between their cheeks long enough to propose a bunch of goody two shoes legislation that will be forgotten on the first Wednesday following the first Monday in November.