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David Yen
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CFPB announced some relief for students.
After winning the avoidance action the trustee could have said to the debtor, start making your mortgage payments to me as the trustee of the bankruptcy estate. I understand why a trustee would not want to become a mortgage servicer. For one thing it would mean that he would have to keep the bankruptcy estate open for up to 29 years. But there is something in the middle that would not result in the debtor losing the home and would result in a timely distribution to the unsecured creditors. The trustee could sell the mortgage. The buyer could be the original mortgagee or a third party. There are definitely third party investors who will buy assets like this. Since the mortgage is now nonrecourse it would undoubtedly sell at a discount. However, the sale price may well be comparable to the net proceeds payable to the bankruptcy estate after the sale of the property. The transaction costs of selling real property may be the same or more than the discount that an investor would require when buying the mortgage.
Toggle Commented Apr 3, 2014 on Reflections on the Dark Side at Credit Slips
I think that this is very bad drafting. According to Matthew 19:24 "And again I say unto you, It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God." This language could act as a permanent bar to the lender from entering heaven. Ok, maybe that was intended by the drafter. But if it wasn't then something like the following would be better Provided, that if a rich entity, or those persons who own or are managers of a rich entity, cannot enter the kingdom of heaven, the end of the world shall effectuate a forgivenss of this debt, effective as of two planck time units before the end of the world. Furthermore, this forgiveness of debt shall constitute income to the other party to this contract, which shall be taxable by the IRS and any other earthly, heavenly, or hellbased equivalents to the IRS, effective as of one planck unit before the end of the world.
Is there any useful analogy to the recent US Supreme Court decision in Armour v. City of Indianapolis? that's the case where some property owners paid their sewer assessments in a lump sum, but most financed the assessment. Then the City decided to issue bonds to pay for sewer improvements, forgave the amounts owed by the property owners who had chosen to finance the assessment, and then refused to give the prepayers any refund. Or as Linda Greenhouse said, "Three dozen paid up front, and the city then played them for suckers."
Toggle Commented Jul 24, 2012 on The Awesome Pari Passu Hearing at Credit Slips
I don't think that an unsecured creditor should have standing to object to a plan because a secured creditor is getting less under the plan than it normally would. Anyway, "consent" is specifically listed as one way to deal with a secured claim. One of three listed options in section 1325(a)(5) is "(A) the holder of such claim has accepted the plan." So even if the unsecured creditor somehow has standing, the objection that the plan doesn't comply with 1325(a) because it modifies the secured creditor's rights doesn't make sense when the secured creditor has consented. The unsecured creditor can object if the plan doesn't pay all disposable income into the plan. If the modification of the mortgage results in freeing up income that would otherwise go towards servicing the mortgage that is being consensually crammed down, that benefits the class of unsecured creditors. If there are junior liens that are completely underwater, they will be paid as unsecured, which could dilute what gets paid to credit cards, but so what?
Toggle Commented Jun 30, 2012 on The New Cramdown at Credit Slips
I think that Pennsylvania recognizes tenancy by the entireties. If the house was owned in tenancy by the entireties, creditors of only one spouse could not get at the house. So the transfer may not have been fraudulent as to creditors
I try not to argue with data because data usually wins. However, I think it will be interesting to see if "this time is different," This recession and this housing bubble are unprecedented (so they tell us) since the enactment of the Bankruptcy Code in 1978. Even with the 2005 amendments, the Code as it is now is substantially more debtor friendly than was the Bankruptcy Act during the Depression. My hypothesis is that at least in jurisdictions where mortgage holders can get deficiency judgments, former homeowners will be filing bankruptcy to protect their income from garnishment once they get jobs. But my ground level view is pretty skewed, and this probably won't be true on a macro level
Is student loan debt securitized in the same way as other debt, such as credit card debt? What are the differences if any between gov't guaranteed and private student loan debt? Did the price for securitized private student loan debt change after the 2005 amendments made private student loans nondischargeable in bankruptcy except for undue hardship? Is there a coming bubble in student loan debt? I'm not sure how that would even work. Is student loan nondischargeabilty the rough equivalent of nonmodification of home mortages in Chapter 13? Something that makes it look like the loan is a safer investment than it really is. fool's good for the investor who buys the securitized student loan package?