Write Your Congressman to Support the Helping Families Save Their Homes in Bankruptcy Act of 2009

UPDATE – MAY 8, 2009

BAD NEWS – THE LEGISLATION WAS DEFEATED IN THE SENATE … IT IS BACK TO THE DRAWING BOARD WHEN IT COMES TO PRINCIPAL REDUCTION RELIEF FOR HOMEOWNERS WHO ARE UNDERWATER ON THEIR HOMES.

YOU CAN STILL HELP – PLEASE SEND YOUR CONGRESSMEN AND SENATORS THE FOLLOWING EMAILS –


Please email your friends the link to this Website and encourage them to do the same. If they are outside the State of Michigan, they can find their U.S. Senators by going to the following link:

http://www.senate.gov/general/contact_information/senators_cfm.cfm

If you’re from Michigan, write each of your Senators by clicking on the following links:

Senator Debbie Stabenow

MESSAGE TO THE PRESIDENT – WE NEED YOUR SUPPORT

Mr. President,

I respectfully wish to remind you of a campaign pledge and promise repeatedly made – to the millions of American’s who are underwater in their homes ..and have suffered elimination or severe decline in incomes. The current word is that the Democratic leadership is going to abandon the cram down legislation when Spring term returns. In states such as Michigan, the 80-105% program means nothing, because property values have declined too dramatically – leaving home values too low in ratio to mortgages to qualify.

You are a pragmatic individual – so you understand that the lenders will not negotiate in good faith to reduce principal balances unless there is a leverage point (i.e. a stick). Thus far, virtually no lender has agreed to reduce principal on any mortgage.

I’m an attorney in Metro Detroit. In November, we began a radio show, “The Financial Crisis Talk Center” on Saturday mornings (www.financialcrisistalkcenter.com). The show allows callers to call in and vent; we also include guests and our suggestions to tell people how to whether this storm. For the past 4 months, I have been telling listeners to wait – that the Homeowners Relief Act, which has your support, will pass – and then, and only then, will we be in a position to negotiate meaningful mortgage modifications outside (and if necessary, inside) the bankruptcy process.

What am I to tell them now? Yesterday, I informed them how the political process works. When it wants something – it talks about it and the media then dives into the issue for more buzz. When it wants something to go away – it stops talking about it – so the media has nothing to ask. This is precisely what you are doing with two critical issues that face Michigan and the Midwest. The first, is the Bankruptcy legislation – here you have stopped talking about it – which means you’re abandoning it – and now it is going away.

The second – on the auto front. Before you acknowledged that bankruptcy would decimate the country because – (1) people will not buy cars from a company in bankruptcy because of (a) warranty concerns, and (b) recognition that resale value will be nil; and (2) that 3 million jobs downline are at stake.

Now – the “floated” notion of a 361 Bankruptcy for GM is being talked about – and the solution to put all at ease is that the Government will back the car warranties.

What is silent – and therefore not challenged by the media – is that no one will buy a car due to the resale issue; as well as the 3 million lost jobs.

Bottom line – good people are suffering real hardship in the Midwest. Many of these people broke rank and voted for you – and believe in you. I respectfully submit, however, that you need to follow through on the support y you pledged to them – and keep in mind, from here, the support of the banks, insurance companies and credit card issuers is looking a lot like the trickle down … that doesn’t trickle.

Of course, you are welcome to call in and address these issues as a guest on our show, next Saturday at 9 AM. Our US Congressmen (Thad McCotter and Gary Peters) appear as guests on a regular basis.

Most important – please “talk about the Bankruptcy reform” and make it happen. I recognize the monumental tasks you face – but I, like most of Michigan, believe in you and believe you can make it happen if you remember the people.

PLEASE WRITE PRESIDENT OBAMA AND REQUEST THAT HE RENEW HIS PLEDGE AND SUPPORT FOR THE CRAM DOWN LEGISLATION THAT WILL HELP HOMEOWNERS UNDERWATER IN THEIR HOMES …. YOU CAN REACH HIM AT:

www.whitehouse.gov/CONTACT/

Update – Mortgage Modification Bankruptcy Bill

As of 4-9-09 – Cram Down Bill is in Trouble …

MORTGAGE MODIFICATION, EXECUTIVE COMPENSATION LIKELY TO BE DROPPED FROM SENATE AGENDA

Senate Democratic leaders appear likely to drop several high-profile legislative issues from their agenda, including efforts to tax bonuses paid to corporate executives and giving bankruptcy judges the ability reduce mortgage payments on the primary mortgages of chapter 13 debtors, according to a CongressDaily report today. Senate aides said that the legislative agenda this year might increasingly focus on revamping financial regulations — which could reach the Senate floor in late summer — and on health care reform. The chamber will reconvene April 20 by taking up a fraud-enforcement bill that authorizes increasing Justice Department funding and authority to crack down on mortgage fraud and other crimes related to federal assistance programs. Those efforts come as more high-profile legislation sits on the back burner in the face of opposition from Republicans and moderate Democrats. Senate Majority Leader Harry Reid (D-Nev.) and Senate Finance Chairman Max Baucus (D-Mont.) have said that they have not dropped efforts to craft a bill slapping heavy taxes on bonuses for firms such as American International Group that received bailout money, but Democrats have no immediate plans to move an AIG bill in the face of White House concerns and strong opposition from the banking industry. Also faltering is mortgage cramdown legislation that lobbyists and some senators say lacks the votes to pass. Reid has said previously that he is prepared to drop the cramdown language provision from a broader housing bill if the votes are not there.

As of now, the bill has passed the House, but is being delayed in the Senate. Timing as of now looks like it will come up after the Spring Recess in mid April.

As of 3-18-2009 (No Change as of March 31, 2009)

Senate Democrat Says 60 Votes Not Likely on Cramdown Provision

A key Senate Democrat said yesterday that it was unlikely the chamber would consider a bill to allow bankruptcy judges to modify terms of a primary mortgage until after the spring recess, CongressDaily reported today. Sen. Evan Bayh (D-Ind.) said there is not enough support to prevent a filibuster of the bill that would allow mortgages to be restructured through a chapter 13 filing. “I think this is going to be probably not taken up until after the upcoming recess. But right now I think there is going be some difficulty in getting to the 60 votes,” said Bayh. Senate Majority Leader Reid said that timeframe was about right. “I would expect very soon after we get back after April recess that we’ll be working on what they [Banking Committee] report out,” he said. He is working with Judiciary ranking member Arlen Specter to narrow the eligibility for borrowers who could cram down the principal of their mortgages. Senate staffers met yesterday afternoon in an effort to work on a compromise. The House-passed version allows bankruptcy judges to consider whether homeowners were offered a “qualified” loan workout similar to a plan the Obama administration has announced to help lower the interest rate for up to 9 million families. But the House measure did not mandate that the borrower had to take such an offer if he were eligible, in lieu of cramdown – a provision advocated by the lending industry. Senate moderates are pushing for such a requirement. Bayh said he is looking to impose a sunset period for the cramdown provisions

Auto task force should pump up sales, not concessions

Commentary

Auto task force should pump up sales, not concessions

Ken Gross

We’re back to Stage 1 with the auto bailout. GM has been told it must gain greater concessions from the bondholders and the UAW within in 60 days or else. Chrysler has been told it has 30 days to cut a deal with Fiat or else. We’re told the banks and AIG are too big to fail. Our country’s largest manufacturing industry, however, is not.

It is apparent that this double standard is not going away. Rather than dwell on the idiocy, maybe we need to point our government in a different direction.

The Obama administration’s auto task force may have no auto experience, but it appears that it lacks business sense as well. The key to getting beyond this crisis is not endless streamlining, plant closings and union concessions. All of the concessions in the world will not cause a turnaround in the industry if sales remain at 60 percent of normal levels. No business can sustain a loss in 40 percent of its sales volume, yet alone a capital-intensive industry such as the auto industry.

The fact is that the industry will burn through the money unless auto sales are stimulated.

To do that, all that is needed is to provide government guarantees to the banks on leases and loans to buy domestic-made vehicles. The interest rates should range from 1 percent on fuel-efficient cars to 4.99 percent on the SUVs.

The federal program has to say to the banks: If you want the guarantee, then you must approve loans for buyers/lessees with FICO scores above 600 (not the ridiculous new requirement of 700 that has killed the market). If the buyer/lessee defaults, then the bank is covered on 90 percent of the loss following repossession and sale of the vehicle.

Government-backed guarantees to the bank are the foundation of the manner in which the Small Business Administration has done business for years in financing new businesses. Implementation of such a program would not be difficult.

How do you get the banks to comply? First, if the government guarantee is in place, then the banks will recognize a good deal and extend the credit. As a backup, the Treasury needs to condition any further Toxic Assets Relief Program funds to the banks so all such extensions of funding constitute a demand loan, which means the Federal Reserve can call the loan at any time and demand repayment. This is precisely how these same banks lend money to businesses.

If the banks don’t start lending money and doing as the Fed sees is in the public interest, then the Fed calls the loan. Either the banks play ball or they are out of the game.

Congress, it is not that complicated. Please, grabbing the microphones to scream about AIG bonuses and complaining about the auto industry of the 1970s. Instead, do something smart for a change.

Ken Gross is managing shareholder at the Metro Detroit law firm of Thav, Gross, Steinway and Bennett and host of “The Financial Crisis Talk Center,” which airs at 9 a.m. Saturdays on WDFN Radio 1130 AM.