Recent legislation last week failed to allow Bankruptcy Judges to order "Cramdowns" - which would have resulted in lower balances owed for home owners drowning in their home loans here in Los Angeles and the country. When it sounds to good to be true then it probably is. Never underestimate the power of a Bank Cartel to lobby for their interests in Washington effectively. To be fair, however, their contractual obligations to investors down the line have been problematic to say the least. Contract law makes it kind of difficult to unilaterally change the terms of an agreement that both sides understood.
So, what is the next Chapter in the Real Estate nightmare for so many? The Senate voted Wednesday to make it easier for homeowners with risky credit to switch to a lower cost mortagage backed by the government, but effectively conceded defeat on the Cramdowns by not including the provision in this latest version. Many people are wondering why they haven't seen the results from all of these Programs in the Headlines. Answer - Because, despite the incentives these programs are VOLUNTARY for the banks, and they still need to get permission from the Investors of these Mortgage Backed Securities to cut a new deal.
The good news is this. The incentives are increasing with each passing legislative announcement, and the reality is setting in that these Investors may not get their money anyway so why not cut a deal while they can still get something. As a Los Angeles area Bankrtupcy Attorney, I am finally starting to sense that your options may be improving, and we can provide you a real plan on how to salvage your Financial Dilemma without creating empty promises and false hopes. Just remember, if it sounds too good to be true, then it probably is.
-Kirk Laron
