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Bankruptcy

Credit Slips

A discussion on credit and bankruptcy.
By Bob Lawless, Adam Levitin, Angie Littwin, Katie Porter, John Pottow, Debb Thorne, Elizabeth Warren

Post Frequency: 12.8/day

Last Entry: April 01, 2011 at 09:01:41

More on the McCain Plan

Posted on October 10, 2008
Good news: McCain bailout will stop foreclosures. Bad news: it's horribly expensive for taxpayers and there's a better alternative with no cost to taxpayers.

Posted on October 10, 2008
Credit Slips would like to welcome back Professor Christian Weller of the Center for American Progress and the University of Massachusetts Boston. Professor Weller will offer his insights as an economist on the current crisis and what we might do...

Ratio of Chapter 13s Is Declining

Posted on October 10, 2008
A centerpiece of the 2005 bankruptcy law was to force more debtors into chapter 13. The credit industry claimed many debtors were abusing the process by filing chapter 7 when they could at least make a partial repayment to creditors...

Who Needs Bankruptcy Reform?

Posted on October 10, 2008
When Eric Nguyen, a 3L at Harvard Law School, conducted his research on the disproportionate efforts of families with children to save their homes through bankruptcy, he seemed to be embarking early on a promising scholarly career. But events have...

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Underwater Homeowners

Posted on October 08, 2008
1 out of every 6 US homeowners is underwater. There's probably no better indicator than being underwater of a mortgagor who is likely to end up in foreclosure. That's very worrisome. And it means that foreclosure prevention plans that don't...

Why the McCain Mortgage Refinancing Plan Won't Fly

Posted on October 08, 2008
The McCain mortgage refinancing plan cannot work because it does not account for the problems created by securitization.

A Countrywide Settlement

Posted on October 06, 2008
Bank of America has agreed to settle a deceptive mortgage practices lawsuit on behalf of its relatively new subsidiary, Countrywide Financial, the notoriously aggressive mortgage lender. The attorneys general of Illinois and California negotiated the settlement on behalf of their...

Foreclosure Tragedy

Posted on October 03, 2008
An excruciatingly sad story about the human costs of the home-mortgage crisis: http://www.cnn.com/2008/US/10/03/eviction.suicide.attempt/index.html. A 90-year-old woman, Addie Polk, shot herself inside her foreclosed, Akron, Ohio home. It appears that she will live, although she is still in the hospital...

Homeowners in Bankruptcy

Posted on October 02, 2008
Katie Porter makes some excellent observations about the Carroll and Li study of homeowners in bankruptcy. There's another crucial point to add: the study's conclusions only tell us, at best, about bankruptcy today. It shouldn't be much of a surprise...

Bankruptcy Filings Reset Post-2005 Record

Posted on October 02, 2008
September 2008 bankruptcy filings are up 1.9% from the previous month and up 28.8% from the same month one year before. That is an annual growth rate of 25.3%. Those figures represent an average of 4,574 bankruptcy petitions were filed...

What Happens to Homeowners in Bankruptcy?

Posted on October 01, 2008
Amending bankruptcy law to permit judges to modify home loans for chapter 13 debtors does not seem to be gaining traction in Congress, despite the fiasco with the bailout vote and pressure to incorporate more "Main Street" provisions. For many...

Future of Bank Regulation: GSE-lites?

Posted on October 01, 2008
Two possible directions are possible in banking regulation: a move to universal banking, in which there is no distinction between commercial banking, investment banking, and insurance (much like in Germany) or a return to the stricter divisions of Glass-Steagall...

Senate Bailout Bill: Just a 451-Page Version of Paulson's Two-and-a-Half Pages

Posted on October 01, 2008
The 451-page Senate version of the bailout bill has almost no substantive differences from the two-and-a-half page bill that Treasury originally proposed.

$250K FDIC Caps: Nice, but Irrelevant

Posted on October 01, 2008
Raising the FDIC deposit insurance cap is a helpful, but largely irrelevant move.

Bailout Bill Executive Compensation Provision: Lipstick on a Pig

Posted on September 29, 2008
The executive compensation provisions of the bailout bill are lipstick on a pig: they apply, at most, to reducing the corporate income deduction by $1.5MM for a handful of very large financial institutions.

How State Government Can Help Financially Distressed Homeowners

Posted on September 29, 2008
Now that Congress has failed to act to stem the foreclosure crisis, it is up to states to try to protect their residents and economies. A few possibilities remain for state action, some of which states have either toyed with...

Congress to Homeowners: Drop Dead

Posted on September 28, 2008
A draft of the bailout plan is out. And it contains nothing substantive for financially distressed homeowners. The plan directs the Treasury Department to engage in reasonable modifications for residential mortgage loans it controls and to encourage servicers to do...

Colonel Ken

Posted on September 27, 2008
Colonel Ken Allard is no whiner. He's military tough, a firm believer in personal responsibility. But he has been so badly treated by Bank of America that he decided to go public, here and here. Along the way, he picked...

Is the Crisis Real?

Posted on September 26, 2008
At a Harvard panel discussion yesterday, economist professor Ken Rogoff made an interesting point: The liquidity crisis isn't real. Or, to restate it: Any liquidity crisis is caused by the promise of a government bailout. Ken said that his many...

Why The Government Cannot Modify Mortgages If It Purchases $700BN of MBS

Posted on September 24, 2008
I've written a short explanation of the why even if the Treasury buys $700BN of MBS it will be unable to modify the underlying mortgages. The explanation, which is more detailed than any of my previous postings on the subject,...

The Bailout -- another perspective (part 4)

Posted on September 24, 2008
I want to thank the Credit Slips folks for allowing me to drop in unannounced -- I'm off to talk with the bankruptcy judges at their annual meeting, so I expect this will be my last post on the topic...

Mortgage Bankers Association's Cramdown Claim Debunked

Posted on September 24, 2008
I have received several inquiries about the Mortgage Bankers Association's spurious claim that permitting modification of mortgages in bankruptcy will result in higher interest rates or less credit availability. I have drafted a very short explanation of why the MBA's...

The Bailout -- another persepctive (part 3)

Posted on September 24, 2008
What is the purpose of the bailout fund? Even the proponents don't agree on this. It seems clear from Paulson's initial proposal, and Bernake's testimony yesterday, that they see the fund as a fix for a market that has "gone...

"My Country Has Had Crisis..."

Posted on September 23, 2008
If you're like me and seek solace in satire when things go bad, this parody from a blog on The Nation's web site hits the note with perfect pitch. I won't spell out the whole thing here, but it begins,...

The Bailout -- how do we know we really have a problem?

Posted on September 23, 2008
As the politics of the bailout get more and more heated, my friend and colleague Frank Pasquale, a regular at this blogging stuff who has also been thinking about the proposed bailout, was kind enough to comment on one of...

What Does It Take to Modify a MBS Servicing Agreement?

Posted on September 23, 2008
This evening I did a little sample of MBS indentures and pooling and servicing agreements (PSAs) to see what it takes to modify them. This is an important issue because it will determine the amount of MBS that the government...

The Bailout: Terms of the Debate

Posted on September 23, 2008
A quick couple of observations about the bailout debate: 1. No one is arguing about the method of doing the bailout. The idea of a individualized institution-by-institution bailout seems to be the only idea getting any traction even though it...

The Bailout -- another perspective (part 2)

Posted on September 23, 2008
In my prior post I talked about why the bailout was probably the best, if still unattractive, solution to the current mess, while noting that the Fed and administration have done a pretty lousy job of explaining what is at...

Mortgage Modification in Bankruptcy: Redux

Posted on September 23, 2008
The Dodd and Frank bailout proposals have both put the possibility of modifying mortgages in bankruptcy back on the table. To some Credit Slips readers, this is old hat (see below for links to our past posts). But I want...

A Ray of Sunshine

Posted on September 23, 2008
I know things are moving fast and furious on the bailout, but the House did a significant bit of business today that deserves note. By a vote of 312 to 112, Congresswoman Maloney's credit card bill has passed the House...

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