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Great New Reading on Mortgage Modification

posted by Jason Kilborn

It's not all just fun and games with old credit cards at Katie Porter's house!  She and a couple of co-authors have a great new paper on SSRN describing the history of the anti-modification provision for principal residence mortgages, an empirical study of home mortgage burdens in Chapter 13 plans, and some comments on how reasonable forced modifications of those burdens could save not only these folks' homes, but Chapter 13 in general.  This had not occurred to me (I admit), but the 66% failure rate for Chapter 13 plans must be in large part explained by the burden of bloated mortgage obligations. Katie's paper more or less confirms this suspicion empirically. Reducing that burden to a reasonable level would therefore not only help people to stay in their homes, but it could result in a much higher plan-completion rate in Chapter 13 generally. This would be a great double-whammy. The paper deserves a close look by anyone interested in this hot topic. 

In other related news, another CreditSlips blogger has released a particularly high-profile paper on the subject of addressing mortgage foreclosure woes. Elizabeth Warren heads the Congressional Oversight Panel looking into foreclosure mitigation practices, and the panel released its report last Friday. I can only assume the report was authored in large part by Elizabeth--it has the tell-tale signs of her incredibly lucid and incisive writing style, backed up by a wealth of empirical knowledge about how struggling with mortgages and other debts really looks in practice. Check it out!

Comments

Can't wait to read them! So stinkin crazy here at work. I have a new client interview every hour and a half. Ahhh... I can't do work that way!

On subject: The subject of Mortgages making things tough in Chapter 13s and being one of the main reasons for Chapter 13 failure MAKES A TON OF SENSE! I can't wait to read it. Very HOT TOPIC FOR ME.

I can only hope that Prof. Warren and others begin to explore the possibilities of CDO/CDS investment on one side of the fence going hand in hand with Mortgage Servicing Fraud issues on the other ...I.e. investors hedging on one side with CDO/CDSs and using the servicer to tank the invested-in tranche of the RMBS security thereby creating the potential for windfall profits (and possibly insider trading issues, etc) on BOTH sides of the firewalls.... Of course, I have no concept of that which I attempt to speak....

Hi,

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Warm Regards

Foreclosu-re.info Team

http://www.foreclosu-re.info

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