DailyFinance | Don't Ask, Just Cram: It's Time to Put Mortgage Modifications Back into Judges' Hands

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DailyFinance | Don’t Ask, Just Cram: It’s Time to Put Mortgage Modifications Back into Judges’ Hands

DailyFinance | Don’t Ask, Just Cram: It’s Time to Put Mortgage Modifications Back into Judges’ Hands

Via: Daily Finance

Many state attorneys general, federal law enforcers and regulators say they want big banks to pay for their fraudulent foreclosures and abusive mortgage servicing practices by reducing what borrowers owe them by some $20 billion. That’s the amount the banks allegedly saved by doing a lousy job servicing troubled mortgages. (That math is questionable at best, Yves Smith noted when that figure began making the rounds.)

But the solution to this problem is not a settlement with the banks that mandates principal write-downs. Principals on these loans should be reduced, but it should be done in the most efficient, effective way: Congress should give bankruptcy judges back a power they once had — the right to reduce the principal on a mortgage to the home’s current market value. In other words: Bring back the cram down.


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