I am a Bankruptcy Attorney here in the Valley. I wanted to see if anyone would listen to a proposal I have about mortgage-cram down that could work in Chapter 13 Bankruptcy. Let people pay their mortgages at fair interest rate based on what the property is worth during the five years in which the homeowner is in bankruptcy. Then when they get ready to complete the 5 year repayment plan, then the principal will be reduced to 110% of market or fair market whichever is greater. Any money that the debtor's are behind would be wrapped up into the principal. If the homeowner falls behind then the bankruptcy would cancel and the loan goes back to old status.
This would help homeowners start paying on their mortgages. The banks would start getting liquidity back into the markets, and they wouldn't take as big a hit as a full cram-down would give and it would give the banks incentive to fix this mortgage mess and get our economy going again so that real estate values could come up again in five years enough to a much higher recovery on those loans. The banks would get more money in five years than what they would get doing a foreclosure now. It gives struggling homeowners a chance to get ready to move or earn more money to pay the house. By allowing this in bankruptcy only, the banks would be protected by the courts from fraud. It is a win win for everyone. Who can I share this with, in the hopes that this idea might catch some steam?
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