Déjà vu. I awoke this morning to today’s New York Times top editorial Helping the House Poor . It was a direct reflection of my Florida foreclosure defense concerns discussed at length last night over the Obama Foreclosure plan. We had a full house of Florida homeowners facing foreclosure, real estate professionals dealing with the foreclosure and short sale markets, as well as WSVN’s Andre Hepkins reporting on this national economic foreclosure crisis.
The Obama Foreclosure plan problem: it does little for people who have a small amount or no equity in their homes.
The reason is simple: When you have little or no equity in your homes you have little or no incentive to keep the mortgage current. “Owner” becomes “renter”… of his or her own home. Meaning that at the end you will have built zippo equity after making your mortgage payments.
Thus, the consensus is building fast. The stock market too seems to be speaking. Until the markets and government address a way to eliminate the negative equity in the mortgage market we will likely not get through this foreclosure mess.
The House of Representatives spoke yesterday too! They passed a major change in the bankruptcy rules allowing a judge to alter the principal amounts of outstanding principal balances of mortgages when it exceeds the market value of homes. We all call that a “Cram Down”. Because the judge is cramming down the principal reduction down the throat of the banks. In other words it’s a forced modification. Some people consider it a cram up… but I won’t go there!
As a foreclosure defense attorney, I’ve been strongly advocating for the judges to have this new authority since it gives us attorneys a new weapon to negotiate with the banks. In my opinion, the threat of the cram down is as important, if not more important, than actually going through the whole bankruptcy process. In fact, just last night I noted this the missing “club” in the weapon’s arsenal of foreclosure attorneys to help level the negotiating playing field.
I must say it has been rather lonely out there– with little support from anyone including the courts. So, it’s great to see we finally we are getting some help from The President and Congress. But the law has not passed yet. The Senate still needs to vote and things are less certain there.
What can you do?
Do what we’ve been trained to do. Call BOTH your United States Senators and tell them what you think. And remember, if you live in one of the hard hit states for foreclosure: California, Florida, Arizona, Nevada, Michigan and a few others. This new law may determine you, your family’s and your State’s financial health.
For those who joined me last night at the Foreclosure and Bailout Workshop… I thank you for your time and input. Be my guest at my up to the minute Foreclosure Defense Workshops on the first Thursday of Each Month. Next one is schedule for Thursday April 2, 2009 at my office.
