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Q: How can a bankruptcy cramdown help me get a loan modification?

Question: How can a bankruptcy cramdown help me get a loan modification?

Answer: A bankruptcy cramdown is a process that will allow homeowners the option of lowering their principal mortgage balance through the bankruptcy courts – the so-called bankruptcy cramdown.

Loan modification expert, Mike Rockwood, and author of the loan modification workbook I recommend, has said these cramdowns will be the next trend in dealing with the loan modification and foreclosure crisis.

Update: When I first wrote this post in March 2010, Congress was discussing this remedy. See quote below.

However, in June 2010, the U.S. House rejected the mortgage cramdown measure as a proposed amendment to the financial reform bill that was eventually passed.

In this Q&A segment Mike discusses principal reduction trends and the principal reduction programs of Bank of America and Wells Fargo

Note an article on the need for lenders to negotiate principal reductions:

Quote: Following the Obama administration’s announcement that it was stepping up pressure on servicers participating in the Home Affordable Modification Program (HAMP), Center for Responsible Lending President Michael Calhoun issued a statement saying the program adjustments “do little but highlight the continued failure of lenders’ voluntary efforts to stop the foreclosure crisis.”

“Lenders have insisted for almost three years now that they will voluntarily address the foreclosure crisis, but the record shows they’ve made too few long-term modifications,” Calhoun said. “The HAMP program the administration introduced last spring was an improvement, but it was originally designed as just one part of the solution, along with allowing homeowners to seek loan modifications through the existing court system.”

Calhoun called on Congress to take additional steps, including allowing homeowners the option of lowering their principal mortgage balance through bankruptcy courts – the so-called bankruptcy cramdown. Lawmakers, including House Financial Services Committee Chair Barney Frank, D-Mass., have called for passage of cramdown legislation. Earlier this year, a cramdown bill introduced by Sen. Richard Durbin, D-Ill., was decisively defeated in the Senate.

Calhoun also recommended the creation of a “low cost, short term” loan program for unemployed homeowners who have no other option for keeping current on their mortgage. Moreover, Calhoun said the Treasury Department should be required to make all loan servicing HAMP data available to the public so that taxpayers can better evaluate the program and the efforts of individual companies.

Source: http://www.mortgageorb.com/e107_plugins/content/content.php?content.4820 // End Quote

In the meantime, you can take action now and force the bank/servicer to work with you with right tools…

Before completing and sending in a loan modification package, you may want to obtain some coaching to combat the stall tactics banks/servicers are using to cut to the front of the line of other applications and get approved faster

Click here to get proven help with your home loan modification

Homeowners – Need Some Sound Advice?

Get Out of Debt Workbook
Seasoned debt expert shares several little known but highly effective techniques guaranteed to get you out of debt fast – no matter how much you currently owe.
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Get more help on fighting to stop a foreclosure with one of 7 options. For example, if a loan modification is not an option learn about a little-known government program that will stop a foreclosure in less than a day without an expensive attorney.

Also get the latest foreclosure news around the country, read Q&As and other resources.

Legally Restore Your Credit
If you are visiting this blog, you likely have mortgage lates, which are a big blemish on your credit report. Once you resolve your mortgage situation, you can legally remove those mortgage lates and all derogatory credit from your report without having to hire an expensive attorney or credit repair service.

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