| People who took out bad mortgages or bought | | | | Recently decisions have been made requiring the |
| houses they couldn't afford once interest rates reset | | | | lending industry to disclose what it has been doing with |
| shouldn't be helped. “I acted responsibly,” they | | | | loans. It's a small thing but very important. Homeowners |
| said. “Why should someone who acted less | | | | rarely understand how their loan ended up where it is. |
| responsibly than I did be rewarded by a better deal | | | | Sometimes they have conflicting information about |
| then I got?” Others say that the collective impact of | | | | who is entitled to the payments. Servicers don't |
| these mortgages going into foreclosure and people | | | | always talk to each other coherently when they pass |
| filing bankruptcy have such a negative effect on the | | | | paper between themselves, so how can a consumer |
| economy that something needs to be done to staunch | | | | not trained in mortgages be expected to understand |
| the hemorrhaging. | | | | it? Consumers may discover they have rights and |
| The problem is that all of the solutions discussed thus | | | | claims which should be vindicated. Consumers don't |
| far seem to carry a high price tag. Buying the bad | | | | know when their rights are violated, in fact, they often |
| mortgages would cost hundreds of billions, as would | | | | are outraged by things which are lawful while only |
| giving government benefits directly to people with bad | | | | confounded by the unlawful. A lot of these consumers |
| mortgages. | | | | never find out any of this until they file for bankruptcy |
| Also when it comes to mortgages, there are many | | | | and are being foreclosed on. |
| people that have been scammed by a mortgage | | | | Bankruptcy filing is or can be the most powerful |
| broker, promised one loan and given another. To the | | | | foreclosure tool if used properly. In fact bankruptcy is |
| untrained eye, unless those flaws are obvious in the | | | | probably the most powerful financial tool one can use |
| loan documents, the future holder of the loan is not | | | | in this country. And in these tough economic times, it's |
| liable for that claim. If proper assignments were not | | | | not so it's a question of whether a bankruptcy filing |
| completed until just in time for court, the consumer | | | | can stop foreclosure, but more of a question of what |
| may have plenty of rights to offset the claims made | | | | else cans bankruptcy due in addition to stopping the |
| by the servicer. But consumers will never know the | | | | foreclosure. For instance, it may be possible to attach |
| option is there if the lender can hide the chain of | | | | the mortgage itself and entirely strip off the property if |
| assignments behind smoke and mirrors. Bankruptcy | | | | there is an enforceability issue. Likewise, if new |
| courts are federal courts. Federal courts are | | | | legislation is passed, arrears may no longer be an issue |
| constitutionally limited to addressing only a case or | | | | since the home loans will be entirely restructured into |
| controversy between parties who have a true stake, | | | | one mortgage reduced to a fair market value, with a |
| something to win or lose in the outcome. Someone | | | | lower interest rate, a lower payment, and spread over |
| claiming such a stake has to be able to prove it. | | | | 40 years. |