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Author: Matthew N. Luzzetti Publisher: ISBN: Category : Languages : en Pages : 47
Book Description
Reforms made to the U.S. Bankruptcy Code in 2005 instituted a new means testing requirement that restricts the discharge of unsecured debt under Chapter 7 to filers with income below their state's median, thereby forcing filers with income above their state's median into a costly Chapter 13 repayment plan. We construct a quantitative equilibrium model of the mortgage and unsecured credit markets to assess the impact of this reform on the severity of the housing crisis during the Great Recession. We find that while this reform increased the relative attractiveness of mortgage default, its impact on the housing market during the crisis was largely mitigated by general equilibrium effects on mortgage lending standards. Allowing bankruptcy judges to reduce mortgage principal for underwater homeowners through a policy of cramdown would have had only a small impact on the mortgage default rate during the crisis.
Author: Matthew N. Luzzetti Publisher: ISBN: Category : Languages : en Pages : 47
Book Description
Reforms made to the U.S. Bankruptcy Code in 2005 instituted a new means testing requirement that restricts the discharge of unsecured debt under Chapter 7 to filers with income below their state's median, thereby forcing filers with income above their state's median into a costly Chapter 13 repayment plan. We construct a quantitative equilibrium model of the mortgage and unsecured credit markets to assess the impact of this reform on the severity of the housing crisis during the Great Recession. We find that while this reform increased the relative attractiveness of mortgage default, its impact on the housing market during the crisis was largely mitigated by general equilibrium effects on mortgage lending standards. Allowing bankruptcy judges to reduce mortgage principal for underwater homeowners through a policy of cramdown would have had only a small impact on the mortgage default rate during the crisis.
Author: Eric A. Posner Publisher: ISBN: Category : Bankruptcy Languages : en Pages : 22
Book Description
The housing crisis threatens to destroy hundreds of billions of dollars of value by causing homeowners with negative equity to walk away from their houses. A house in foreclosure is worth 30 to 50 percent less than a house that a homeowner either retains or sells on the market, and a foreclosed house damages neighboring property values as well. We advocate a reform of Chapter 13 that would allow homeowners to strip down the value of their mortgages in a prepackaged bankruptcy. Such a plan would give homeowners an incentive to keep or resell their homes, thus reducing the market value loss of homes while protecting the effective value of creditors' interests. Two further key elements of the plan are that it uses prices based on the average house price in a particular ZIP code, which reduces moral hazard; and it is automated, requiring only a rubber stamp by a bankruptcy judge or other official, thus preserving judicial resources. Other plans, including that of the Obama administration, are compared.
Author: United States. Congress. Senate. Committee on the Judiciary. Subcommittee on Administrative Oversight and the Courts Publisher: ISBN: Category : Business & Economics Languages : en Pages : 152
Author: Michelle J. White Publisher: ISBN: Category : Languages : en Pages : 24
Book Description
This paper discusses four bankruptcy-related policy issues. First, what is the economic rationale for having a bankruptcy procedure at all and what defines an economically efficient bankruptcy procedure? Second, why did the number of U.S. bankruptcy filings increase so dramatically between 1980 and 2005? Third, a major bankruptcy reform went into effect in the U.S. in 2005--what did it do and how did it affect credit and mortgage markets? Finally, the paper discusses the mortgage crisis, the high social cost of foreclosures, and the difficulty of avoiding foreclosure by voluntarily renegotiation of mortgage contracts, even when such renegotiations are in the joint interest of debtors and creditors. I also discuss the pros and cons of government programs to refinance mortgages and the possibility of giving bankruptcy judges new power to change the terms of mortgage contracts in bankruptcy.
Author: Bebe Stokes Publisher: Xulon Press ISBN: 1622303997 Category : Business & Economics Languages : en Pages : 146
Book Description
"If you are 'upside down' and/or facing foreclosure of your home, life can seem like a runaway train careening toward disaster. During the process of completing this book, I noticed the laws are changing rapidly. But real options are open to you-and it's time you knew them......
Author: United States. Congress. Senate. Committee on the Judiciary. Subcommittee on Administrative Oversight and the Courts Publisher: ISBN: Category : Law Languages : en Pages : 248
Author: United States. Congress. House. Committee on Oversight and Government Reform. Subcommittee on Domestic Policy Publisher: ISBN: Category : Business & Economics Languages : en Pages : 192
Author: Nina Liao Publisher: ISBN: Category : Languages : en Pages : 39
Book Description
The U.S. bankruptcy system has served as a safety net for millions of Americans for the last 110 years, but it is failing to prevent foreclosures today. Amid angry investors pointing fingers at Wall Street and nervous federal officials answering to allegations, economists and bankruptcy judges debate the controversial modification of loans, a process called cram-down. Cram-down is a feature of bankruptcy law that permits a debtor to pay a creditor the value of the collateral instead of the full value of the loan. Under current law, judges can modify mortgages on vacation or second homes. Oddly, the Bankruptcy Code creates an exception for mortgages secured solely by the debtor's primary residence. For millions of distressed homeowners, this exception forces them to pay their mortgages in full despite sharply declining home values. Proponents of cram-down advocate for the elimination of this exception, but opponents warn that changing the status quo could exacerbate the housing crisis.Although keeping the current law is unacceptable, cramming down all undersecured mortgages is too risky because it can reduce access to credit and obstruct homeownership. Congress needs a unique two-part strategy that can adequately relieve Chapter 13 debtors affected by the recession while creating a sustainable bankruptcy system. First, Congress should pass a temporary cram-down relief measure. It should then implement a permanent system that relies on judicial discretion to modify loans consistent with jurisdictional Chapter 13 practices and needs. Based on the established means test of the 2005 Amendments, the temporary measure should provide relief quickly to distressed homeowners in Chapter 13, particularly victims of predatory lending. The relief measure should sunset, however, to account for unforeseeable consequences of cram-down. The permanent system will differ in that, while judges can continue to modify loans, they must treat cram down as a last resort and carefully pursue an objective inquiry. If designed and monitored carefully, cram-down can be a win-win proposition.
Author: Gini Graham Scott Publisher: Booktango ISBN: 1468929623 Category : Business & Economics Languages : en Pages : 140
Book Description
The book combines a personal narrative about experiencing the foreclosure process with stories of middle income people faced with underwater homes and mortgages they can't pay. It describes the author's experiences with real estate professionals, bankruptcy attorneys, activist groups seeking to stop foreclosures, and others involved with the housing crisis. It describes her lessons learned from finally selling her home, renting in San Francisco, and turning her life around to gain success again. The book has gained growing support from individuals and groups active in this arena.
Author: Matthew N. Luzzetti
Author: Matthew N. Luzzetti
Author: Eric A. Posner
Author: United States. Congress. House. Committee on the Judiciary
Author: United States. Congress. Senate. Committee on the Judiciary. Subcommittee on Administrative Oversight and the Courts
Author: Michelle J. White
Author: Bebe Stokes
Author: United States. Congress. Senate. Committee on the Judiciary. Subcommittee on Administrative Oversight and the Courts
Author: United States. Congress. House. Committee on Oversight and Government Reform. Subcommittee on Domestic Policy
Author: Nina Liao
Author: Gini Graham Scott