Cramdown Fails Barstool Test

I hate Schumer, but on this he is absolutely correct. The Big Bankers are screwing the public and they will continue to do it until we …..well until we stop them. Problem is we are all not educated enough to know what they are doing. So they pay off the politicians and get their laws passed and stop the ones they dislike. They get rich and the little people pay.

But Scumer and Durbin did put everything into their cramdown campaign. They lost cramdowns are flawed, and only hugely supported by those who stand to gain from it– homeowners who need a big price cut frm their originally agreed purchase price in order to afford their home. All the rest was false rhetoric about how it is good for the lenders or how the lenders deserve whatever punishment and losses cramdowns dish out to them.

Yes, many underwater borrowers need a lot of help, but making the lenders and investors fund their aid with a retroactive change in the loans (allowing cramdowns for loans made under the assumptiont hat cramdwons would NOT apply) was seen as a terrible precedent with terrible effects:

1. making the lenders pay to help the borrowers weakens them and makes it difficult to get our the financial system back on track

2. showing lenders that their right to collect on debts will be restricted retroactively when debtors can't pay will force lenders to limit loans in the future to only the most qualified borrowers who will be able to pay rathert thant go to Congress to have contracts re-written for them so they don't hvae to pay.

The guys in the bar do understand the difference:

1. some credit card featrues are reasonable, like the one that says you have to pay back what you spent. It's just the outragwous fees and intrest rate traps that Congress wants to fix.

2. Bankruptcy cramdown involved giving the home buyer a tool to apply for a huge retroactive PRICE CUT, not just interest rate cuts, and not making the seller or real estate agent or appraiser foot the bill, but making the lender pay for the price cut.

So it fails the barstool test not because it's too complicated to understand. It's not. Cramdown is too good to be true, that the big bad lender might have to pay for the homebuyer's unfortunate purchase decision. If Schumer had proposed that the big bad credit card company should pay for half of what the consumer bought with the credit card, the barstool guys would laugh and say, sign me up, and give me my car for free too.

[...] Lillis of the Washington Independent has this little opinion from Chuck Schumer (one of the Democrats whose adherence to Democratic values is iffy at best): In an interview with [...]

[...] See more here:  The Washington Independent » Cramdown Fails Barstool Test [...]

[...] The Washington Independent » Cramdown Fails Barstool Test [...]

Chase bought out WAMU for 1% of its assets. That means they bought my half-million WAMU mortgage for about $5,000. I put down 20% and have a 740 credit score. I have lost my job, and due to 12 vacant foreclosed homes in my neighborhood my home is now worth $280,000. Chase refuses to lower the amount owed; they will only lower the interest rate — even though they only bought my home for 5,000 they're keeping me on the hook for half a million. Cramdown legislation would have corrected this. My best option is to abandon my home and raise the number to 13 vacant foreclosed homes in my neighborhood.

Chase bought out WAMU for 1% of its assets. That means they bought my half-million WAMU mortgage for about $5,000. I put down 20% and have a 740 credit score. I have lost my job, and due to 12 vacant foreclosed homes in my neighborhood my home is now worth $280,000. Chase refuses to lower the amount owed; they will only lower the interest rate — even though they only bought my home for 5,000 they're keeping me on the hook for half a million. Cramdown legislation would have corrected this. My best option is to abandon my home and raise the number to 13 vacant foreclosed homes in my neighborhood.