Kredietcrisis, wetgeving en beperkingen van rechters

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

Kennelijk komen de Amerikanen (in ieder geval de Democraten) toch tot de
conclusie dat ´het bloeden van de economie´ alleen maar gestopt kan worden
door het zoveel mogelijk voorkomen van ´foreclosures.´

Het probleem is het grote aantal partijen doordat de verstrekte hypotheken
werden omgevormd tot pakketjes met hypotheken van verschillende pluimage
(en dus verschilllende kredietwaardigheid).

Het maken van pakketjes heeft ook onvermoede ´bijwerkingen´, zoals b.v.
een huiseigenaar die bij de rechter aandrong op het ter tafel brengen van
de diverse aktes, zodat vonnis kon worden gewezen op basis van volledige
documentatie. De eiser kon dit niet en de eigenaar zit twee jaar na dato
nog steeds in het huis.

Een soortgelijk geval werd reeds in een eerder stadium gestopt, omdat de
eigenaar direct de ´servicer´ aansprak hierop, en eiste dat de originele
akte op tafel kwam. Heeft sindsdien niets meer gehoord van de ´servicer´
die immers nog genoeg werk had aan andere ´foreclosures.´

Een van de grootste verstrekkers van dit soort hypotheken Citigroup had
geen ´servicekantoor´ en is er dit jaar een gestart.
Dus kennelijk winstgevend genoeg?

Zoals hieronder bericht dachten rechters er in het verleden verschillend
over, en nadat de Supreme Court het wijzigen van eerste hypotheken in
strijd met de wet vond ontbrak de juridische basis hiervoor.

Het blijkt nu, na onderzoek, dat het zelfs voor de eigenaars van
hypotheken uiteindelijk voordelig is om deze wijzigingen wel te kunnen
aanbrengen.
Dus dan zullen ook de ´servicers´ om moeten, na een wetswijziging.

Dan kunnen ook eigenaars die niet in de problemen komen, weer rustig gaan
slapen, want nu is het zo dat een paar lege en vervallen huizen in de
straat hun huizen onverkoopbaar maken.

Het is ook in het voordeel van gemeenten en staten, omdat een groot deel
van de geheven belasting gebaseerd is op de waarde van huizen. Dus als de
waarde van huizen met 15% omlaag gaat, dan volgt de belastingopbrengst
hetzelfde patroon. Met als gevolg minder brandweer & politie, minder geld
voor scholen, etc.

Groet / Cees

Congress Ready to Consider a Bolder Mortgage Fix
http://www.time.com/time/printout/0,8816,1868405,00.html
Last summer, Congress approved what was billed as a bold plan to stave off
foreclosures by luring lenders and borrowers into renegotiating mortgages.
So far, fewer than 400 homeowners have applied. Other government and
private programs to modify loans have had somewhat more uptake, but still
haven't done much to slow the unprecedented wave of foreclosures sweeping
the country.

And so next month, lawmakers will reconsider another, bolder plan: letting
bankruptcy judges force lenders into modifying mortgages. It might
actually work.

The bankruptcy proposal came up in Congress several times over the past
year, but was thwarted by opposition from Republicans and the banking
industry. Now, however, the banking industry and its lobbyists have lost a
lot of sympathy, the new Congress that meets Jan. 6 will contain
significantly fewer Republicans, and President-elect Obama—unlike the
current occupant of the White House—is a big supporter of the plan.

Even some in the mortgage business are beginning to warm to the concept.
"As a matter of general policy it is probably bad," says Scott Stern, CEO
of Lenders One, a national cooperative of independent mortgage brokers.
"But I think extreme circumstances call for extreme responses."

Just what is this plan? As the law stands now, a mortgage on a first home
cannot be modified as part of a personal bankruptcy proceeding.
Second-home mortgages, apartment-house mortgages, and loans on yachts and
other property all can. In those cases, a bankruptcy judge has the power
to force forgiveness of some of the debt as part of a repayment plan. The
bill that Sen. Dick Durbin of Illinois and Rep. Brad Miller of North
Carolina plan to introduce on the first day of the new session would give
judges the power to do the same thing with first-home mortgages.

The problem the bill is intended to address is that there are so many
different parties involved in modern mortgages that it's sometimes
impossible to get them to agree on anything. Servicers have different
incentives from investors—and those investors are often scattered around
the world. First-lien holders have different incentives from second-lien
holders. The result is often deadlock, even when renegotiating the
mortgage and writing down its value would result in lower losses than
foreclosure. A bankruptcy judge could cut through all this and force
compromise.

Banking industry groups, and some finance scholars, counter that there's a
downside: If you make it easier for people to get out of their mortgage
debts, mortgage lenders will demand bigger down payments and higher
interest rates to compensate them for the added risk. This argument makes
some sense in terms of economic theory, but there are several real-world
problems with it.

One is that we're in the midst of an epic housing collapse that demands
dramatic solutions—even if they might come with some costs down the road.
That's mortgage broker Stern's position. "There is currently already a
loss of integrity in the system," he says, "and we're not letting
bankruptcy judges modify mortgages." Stern only endorses a temporary
change in the law. Durbin and Miller's bill will call for a permanent
shift, but last year Durbin amended it so it applied only to mortgages
extended before the bill was passed, and he'll presumably be willing to do
the same if that's what it takes to pass it.

It's not clear, though, that the arguments against allowing a permanent
change bankruptcy law really hold any water. For one thing, too-small down
payments were a major cause of the current foreclosure epidemic, so a
change that would goad lenders into requiring bigger ones might do more
good than ill. What's more the bankers' economic argument is not backed up
by the available evidence.

Georgetown Law professor Adam Levitin and Columbia economics graduate
student Joshua Goodman gathered this evidence recently by taking advantage
of a quirk in judicial history. Between 1979 and 1993, about half of all
federal judicial districts interpreted bankruptcy law to mean that judges
could modify first-home mortgages, while the other half interpreted it to
mean they couldn't. The Supreme Court put an end to this in 1993 by ruling
that the latter approach was what the law called for. Levitin and Goodman
examined mortgage data from before then, and concluded "that mortgage
markets are largely indifferent to bankruptcy modification outcomes." The
reason for this, they contend, is that "lender losses in foreclosure would
be greater than in bankruptcy, and so permitting bankruptcy modification
as an alternative to foreclosure would, if anything, benefit lenders."

Before 1979, lenders had veto power over any loan modifications in
bankruptcy. But before 1979, lenders were generally banks and thrifts that
held onto the loans they made. If modifying a mortgage loan would result
in less of a loss than foreclosing on it, they would modify. Today the
gridlocked mortgage markets that securitization has wrought don't seem
capable of making such rational economic decisions. Bankruptcy judges may
need the power to do it for them.

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