Thank you, thank you for (trying to) making me smart(er) about this!!!

Cramdown is simply giving the lender the fair market value of the property securing the loan, instead of letting the lender take the property securing the loan.

Every secured loan, except one secured by your primary residence, is subject to cramdown. Vacation homes, private jets, investment property, manufacturing equipment, every single other type of property is covered by cramdown.

What’s ironic here is that this will screw over lenders in the long run. No cramdown and banks get the home, instead of the fair market value of the home. Now, the banks have to maintain the home, and go to the expense of selling it, to get the same “fair market value.” These maintence and selling expenses cause them to get less than they would have if they agreed to cramdown in the first place.

But it gets worse. Forclosed homes flood the market, which increases supply and forces home prices to drop. So “fair market value” drops, and banks get less still. They are screwing themselves.

Homes flooding the market and further crashing prices is exactly what Obama’s cramdown law was designed to prevent. This measure would HELP banks, not hurt them. But, they are too stupid to see it.

Banks seemingly want to commit suicide. We should let them die.

This is the only reason we keep hearing that it’s ’socialist.’ Decades of anti-socialist sentiment stirred up among a populace who has no idea what’s really going on here. Those people just know that socialism is bad and that Glenn Beck says it’s socialism, and no one wants socialism.

Also, ‘cramdown’ has to be the worst piece of political terminology since ‘tea party.’

I still think a legal case can be made regarding ‘unequal treatment before the law’ regarding ‘cramdown’. How can it be ‘equal justice’ for those who have second/third homes and commercial property owners to have ‘cramdown’ for their bankruptcy proceedings but not homeowners of residences?

More and more people are recognizing that staying put and challenging the foreclosure in court (produce the documents indicating that the entity foreclosing actually is the person who holds the mortgage) is an effective action against the banks,etc.

Thanks for this, Masaccio.

Can we start calling those “renegade” dems False Flag Democrats? To call them snakes-in-the-grass just wouldn’t be fair to snakes.

FunnyDiva

Blue America upstairs with Marcy Winograd, once again challenging Jane Harman

While there are more than enough bad guys in the mortgage markets one group that does not deserve to be lumped into the stew are the community banks. They, for the most part, did not get involved in lair loans, sub prime or any of the myriad of mortgage products that feed the Wall St secularization mill.

However, community banks can least afford cram downs. They hold their mortgages on their books and cram downs could adversely affect their balance sheets, pushing these small banks portfolios from from positive into negative, all for the sin of being old fashion lenders who do not sell their loans.

This is why you had some Dem Senators voting against the cram down bill. Find a way to protect the honest small lenders and you have a good opportunity to pass the cram down legislation.

I can think of a lot of things to call them, but “False Flag Democrats” seems far too genteel to me. I do find it challenging to come up with an appropriate name without resorting to profanity, perhaps I spent too much time in the Navy-the proper use of advanced profanity is a job requirement for a CPO.

What I am sure of is that these Lowlifes will be sucking in a major way if they ever ask me for a dime in the future. I will be pleased to contribute to their opponents, heck might as well have the real thing instead of an ersatz Democrat who bails out every time that it matters. Pay attention, Ben Nelson!

As I understand it, cramdowns would force the banks to give a public and (more)accurate appraisal of their assets. For the time being, they can pretend that the ‘true’ price of these properties is not the market price, and so can claim that they are merely illiquid; not insolvent. Cramdown provisions would change that.

I think the downside on this is promoting risky behavior. Banks were forced to provide a greater and greater share of their mortgage loans to lower income, working class families through the community reinvestment act and its beefing up through the years. This lead to ARMs among other more complex mortgage packages that people have an even harder time understanding. I say get rid of these 0% down loans to people, come up with at least 5% and with that you would also need great credit. How can we expect banks to make quality loans when they are forced into bad situations though these regulations. I think it is crazy to expect a person who has rented all their life, not worried or cared about repair and maintenance of a home be allowed to get a 0% down mortgage. They haven’t proven that they can save money for a down payment, how can they afford to uphold and increase the value of a property, much less pick out on appropriate for their needs. There is something about saving for a long time in order to put down for your house that makes you value it a bit more. You put the effort in to understand hidden expenses and what proper maintenance costs and allows you time to practice to put together a budget and save for a rainy day

Thanks. Can’t be said too often. This is about power and cutting the pie. The banks and their politicians want it all. We need politicians who want to share the pie.

Citi and its ilk are like John Belushi’s character in Animal House: they’d rather swallow the pie whole, the belch and take what’s on the next guy’s plate and do it again.

No amount of mannerly, polite conversation will change that. It has to done at the point of a law and credible regulations, backed by empowered bureaucrats – none of whom can be “former” Goldman Sachs employees – not paid by the banksters to enforce them.

People should not feel that they can take a chance on a house because if they buy it too high then they can skip a couple payments, buy a new car on credit and declare bankruptcy and they will then be able to get the right house price and keep it. Responsibility and putting in the proper due diligence should be stressed. You make the money when you buy a house not when you sell. Also when you buy a house you should be comfortable making those payments for the next 15-30 years, or whatever you mortgage is for. I can pretty much assure you that you should be able to make money over that span of time.

Good thought. If the debtor can force a fair price, the value of the toxic waste on the books of the banks will be lower. If the banks can snag the debtor for an excessive price, even if the loan fails later, the books look better right now.

I generally agree with this. As I pointed out in an earlier post, the community banks were a significant factor in the defeat of the bill, because their hands weren’t dirty.

However, community bank losses on underwater mortgages are just as real as the losses faced by the national banks and the holders of residential mortgage-backed securities. What’s good for the bad guys is equally good for the good guys. The major difference is that community bankers are more likely to know their customer and work out if that is possible. The bad guys don’t.

I heard that BofA loans – formerly Countrywide – is looking to hire a large number of people (what I heard was a four-digit number). Clearly they’re expecting business to continue.

I’m sorry folks but the headline on this is just a bit misleading. Since the election I’ve come to expect the Rethugs to be against any effort to help people in trouble due to the mess that Shrub has brought about. I do however have a real problem with the “RAT” Democrats That allowed the “CRAMDOWN” to be defeated because of their cozy relationship with the Banks.

I don’t disagree with your view of the renegade democratic senators. What I can’t figure out is why none of the Rs voted for cramdown. It is a really good idea, but that wasn’t enough to persuade any of them, including the moderates, and one or two of them who I know are smart enough to see the wisdom of the idea. I talked to a staffer for one of these guys, who told me he thought his boss would vote for cloture if needed to allow the vote, but wouldn’t vote for the bill itself.

This lemming behavior is hard to understand. Why would anyone vote for a party that is just against government? That line of thinking led to this post.

Thanks masaccio.