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Fed Conference on Consumer Credit

posted by Katie Porter

The Federal Reserve Bank of Philadelphia is hosting its biennial researh conference, Recent Developments in Consumer Credit and Payments. The seven selected papers represent hot topics in economic research on consumer credit. Two papers focus on mortgage issues, including a paper by Tomasz Piskorski on the effects of securitization on distressed loan renegotiation. This has been a hotly contested topic, both on Credit Slips and in policy circles. The New York Times had a front-page story today on the incentives of servicers to modify loans, touching upon studies that examine how and whether securitization may limit modifications. Other papers deal with payday borrowing, bankruptcy reform, and retail lending. The full agenda is here.

The conference will be held Sept. 24-25 in Philadelphia. Registration information is available from the first link above.

Comments

Mortgage modifications, while well intended, just "ain't going to work". Those that have, are back into a large default rate again but not as high by comparison to past chapter 13 completion rates of about 30%. If consumers lack the ability to repay, no modification is going to work.

I believe that Mortgage Mods with a cramdown option in bankruptcy would work. Outside of bankruptcy cutting the junk fees charged by Servicers would help a great deal. So, when the we all get back onto our collective feet, what are we to do with all of the inventory of homes? What are consumers to do who had their credit reports trashed due to no fault of their own. ie. layoffs, Illness, sky ass high med insurance and co-pays etc...???

Who is going to be worthy enough to lend to? How long will it take for those now unworthy consumers to rehabilitate their credit being underneath a mountain of debt and dealing with a backward ass bankruptcy system? FIX the Bankrupcy "FIX"! With student loans the way they are, the potential consumers coming out of college are not going to be able to do it. We are going to need a bigger pool of consumers and the only way to get them up and running is by fixing Bankruptcy!

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