Solutions—um, they’ve been out here, Obama

Do you ever feel like that Markopolos guy who kept telling the SEC that Bernie Madoff was running a massive Ponzi, for oh, about ten years, and nobody did anything?  Then they acted all breathless about the fraud when he finally got nailed for it.

Treasury Weighs Fixes to Foreclosure Program

I won’t complain that they are finally trying to do something meaningful but might we consider (for the 1,000th time, but really who is counting) bankruptcy cramdowns for primary single family residences?

Adam J. Levitin http://www.hlpronline.com/Levitin_HLPR_011909.pdf. 

 Helping Homeowners: Modification of Mortgages, 3 HARV. L. & POL’Y REV. (Online) (Jan. 19, 2009)

Or might I suggest (again) some of the solid ideas from Julia Gordon, Senior Counsel at the Center for Responsible Lending, (taken from her latest testimony at the Dec. 9 Hearing before the House Committee on Financial Services

  • Stop foreclosures while servicers evaluate eligibility for loan modifications or other non-foreclosure options.

  • Make the “net present value” (NPV) model for qualifying homeownerstransparent and available to the public.

  •  Ensure that homeowners have adequate equity in their homes to continue with successful homeownership by reducing principal balances on troubled loans. 

  • Create a program to assist homeowners who have lost their jobs and do not have nine months of guaranteed unemployment income.

  • Transfer servicing to entities that don’t have conflicts and automatically convert trial modifications into permanent modifications.  

  • Pass legislation mandating loss mitigation prior to foreclosure

 Here is a link to all of the transcripts from all of the speakers at the hearing:

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