In another disheartening development on the banking front, the Senate defeated legislation giving judges the authority to modify residential mortgages in bankruptcy.
Note that the popular description is often misconstrued in short form descriptions. Judges would not have had open-ended authority to make changes. The construct is that mortgages are collateralized loans. The mortgage balance is written down in bankruptcy to the value of the collateral, and the excess is added to the unsecured creditor claims.
This is also not an arcane process. It’s used in commercial bankruptcies and lending against boats, for instance. Ever hear any complaints about this practice in Chapter 11?
That's right, boats, but not homes.
Once again, George Carlin:
THEY OWN YOU!
When will it ever end!?!
http://www.nakedcapitalism.com/2011/09/summer-rerun-ankruptcy-cramdown-defeated-banksters-again-prevail-over-real-economy.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29
