Bankruptcy

This shouldn’t go by unnoticed: The former head of Enron’s failed Internet division was just sentenced to 16 months in prison, The Washington Post reports. Joseph Hirko, the former broadband unit CEO also agreed to pay $8.7 million in restitution. Prosecutors contend Hirko falsely promoted Enron’s broadband division to analysts to help pump up the [...]

Ever wonder why loan modifications haven’t become the silver bullet that would solve the foreclosure crisis? Via Patrick.net, USA Today explains in simple terms a phenomenon TWI also has noted, when it comes to loan mods: Borrowers who can’t afford their mortgages and go looking for relief wind up with higher — not lower — [...]

This should come as no surprise: Even the mere mention of the possibility of bringing back cramdown legislation prompted the Mortgage Bankers Association to spring into action. Here’s the group’s rapid response to comments this week from several powerful Democrats, who who threatened to renew efforts to allow bankruptcy judges to change, or cramdown, mortgage [...]

As Mike pointed out today, the slow pace of loan modification progress has prompted some lawmakers to once again call for mortgage cramdown legislation that would allow bankruptcy judges to modify loans and keep borrowers in their homes.
But the Obama administration is signaling clearly that while it may be open to some new tactics, cramdown [...]

In the latest issue of The New Yorker, James Surowiecki  weighs in on something TWI wrote about recently: The need for a new — and bolder — foreclosure strategy. Foreclosures continue to outpace loan modifications, even as the Obama administration presses the lending industry to do more. And in some communities, it’s not just the [...]

Because servicers in the lending industry can make more money collecting delinquency fees on mortgages than by modifying loans, guess which road they are taking? The New York Times says today that the longer borrowers remain behind on their payments, the more money servicers collect, even after the home goes into foreclosure. That obviously gives [...]

As Mike Lillis reported yesterday, a small group of Senate Democrats is pushing to revive the mortgage loan cramdown idea — a sure sign of frustration as foreclosures continue to pile up. The Senate in April defeated a cramdown proposal, which  involves allowing federal judges to modify, or cramdown, the terms of a mortgage for [...]

Since the White House effectively killed the foreclosure crisis measure in the Senate, some in the upper-chamber are not ready to give up.

Hoping to bring “cramdown” legislation back onto Congress’ radar, a House Judiciary subpanel met this afternoon to re-examine whether bankruptcy judges should be empowered to alter mortgage loans in order to prevent foreclosures.
Witnesses included the obligatory consumer advocates, a conservative think-tanker and a university professor. But the Treasury Department, although asked to send a representative [...]

Robert Reich, economist and former Clinton administration labor secretary, doesn’t think much of General Motors expected bankruptcy filing today, as the nation’s largest automaker prepares for a de facto government rescue and takeover. If the United States really wanted to help GM, Reich wrote in an op/ed for the Financial Times, it would try a [...]