HPN-

Once again a major lender, originator, servicer, and securitizers are attempting to sell loans free and clear and whitewash their liabilities. GMAC, RESCAP and affiliated entities are currently in over 1900 prepetition litigation cases nationwide, and it is too early to determine if they will abide by the nationwide settlement agreement.

There have been countless efforts since the subprime fiasco, to get a bankruptcy cram down bill passed. The effort has been defeated every time. Ironically, the lenders and servicers have gone bankrupt and in those Chapter 11 processes basic homeowner rights have been taken away.

One such protection that was added to the BACPA in 2005 is 363(o) which has been largely ignored in all these cases – a provision that seems to limit “free and clear” sales of assets that are consumer credit transactions subject to the Truth in Lending Act or consumer credit contracts. Although much fun has been poked at including the phrase “Consumer Protection” in BAPCPA, Congress may have anticipated the problems being raised by the bankruptcies of subprime lenders by adding 363(o) to the Bankruptcy Code.

Homeowners have earned the right to have a seat at the table in this matter.

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