One of the under-reported aspects of the foreclosure crises is how many distressed homeowners are having to resort to delving into the bankruptcy world in order to get any respect as far as obtaining a loan mod, receiving principle reduction or even a loan deferment. Even now, many homeowners continue to be frustrated by the loan mod system.
Many homeowners file BKs in the hope that their BK attorney can get the banks to play ball. But even in BK court, banks don’t have to negotiate with the homeowner unless it suits them. Not that we need more government intervention but it seems as someone in Washington may be listening to the actual issues.
Sen. Sheldon Whitehouse (D-Rhode Island) started pushing legislation that would allow bankruptcy court judges to order foreclosure mediation between homeowners and lenders.
Several BK lawyers have reported that even inside a BK banks (more likely investors) sometimes have an obtuse way of thinking. One Oakland BK attorney mentioned how Freddie and Fannie often don’t act logically when it comes to determining value of a house inside a BK. Don’t we the people own most of Fannie and Freddie? Do we have obtuse people working for us?
When negotiating for a loan mod, short sale or whatever, it often comes down to the “net”. Sometimes, people only ask for a logical response. Hopefully this Senate bill (S. 222) will bring homeowners and mortgage companies together to play nice (and logical) at the negotiating table.
photo credit: credit-liberation.com