Non bankruptcy loan modification is a failure.
Today, the AP is reporting what has been clear to all debtor attorneys for some time, that of the complete failure of the ‘voluntary’ loan modificatin programs. See today’s San Diego Union-Tribune article here: http://www.signonsandiego.com/news/2010/jan/15/obama-mortgage-relief-program-fails-to-deliver/ This article suggests the blame should be placed upon Obama, and to be fair, a good portion of the failure can be attributed to the failed policy. It is clear, though, that the greater failure is squarely attributable to the banks, to fairly and adequately adjust their thinking when it comes to saving American homes and keeping hard working American families in their homes. Clearly, the voluntary loan modification program is a farce given the extremely low success rate. What is needed is a comprehensive forced solution to the housing finance problem. That of loan modification as a function of Ch. 13 bankruptcy. Now certainly the banks will continue to howl about how completely unfair this proposal is, and that’s fine. Perhaps it is unfair. Let”s say that it is, so what? Allowing loan modification in Ch. 13 would be just the right stick to force the banks into the kind of broad comprehensive fair voluntary loan modification that should have been happening for nearly two years now. It’s unconscionable that all sorts of American businessmen are allowed to restructure all sorts of debts in Ch. 11 and Ch. 13 bankruptcies, yet the common American homeowner is not afforded the same rights to restructure their home mortgage to stay in their home. Waiting for the banks to voluntarily agree to loan modification is no longer the correct option, if it ever was correct. Allow loan modifications in Ch. 13, and the banks will then move more quickly to solve the problem, or the American Bankruptcy system will do it for them.
Member, Board of Directors, NACBA
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This is the best article I’ve ever seen on this topic. I’ll be linking and sending out links to this one for a long time. I would recommend that everyone else does the same.