Here’s a real estate term that appears to be gaining popularity its called “mortgage cram-downs.” If you are unfamiliar with the term, The Wall Journal describes it:
In a cram-down, a judge modifies a loan, often reducing principal so a borrower can afford it. Lenders hate it because they have to absorb the loss. Bankruptcy judges currently have the ability to modify certain personal loans and even mortgages on vacation homes, but they can not cram-down mortgages on primary residences.
Apparently, Barney Frank and Christopher Dodd -have made no secret that they support mortgage cram-downs (primary residences). President-elect hasn’t ruled it out.
I personally find it very difficult to swallow the concept of the government supporting (funding) this program. Do you think this is the cure all pill for the nations housing woes? The bigger question, why would any investor invest in securities, or in America for that matter, if a judge can just change the terms of a mortgage (contract) at his/her will.
Do you have any thoughts? Do you support mortgage cram-downs?