Following is a recent letter I received from the National Association of Consumer Bankruptcy Attorneys regarding the Principal Paydown Plan.
Dear NACBA Member:
On
Wednesday, we wrote to bring you up-to-date on activities of NACBA’s
Legislative Committee in support of the Principal Paydown Plan (PPP).
Just as that email went out, we learned that the PPP figured prominently
in a “call to action on housing” sent to President Obama by 32 members of the California delegation in the U.S. House of Representatives. The letter to President Obama reads in relevant part:
“One
promising possibility would be a temporary reduction in the interest
rates of certain homeowners who file for Chapter 13 bankruptcy, so that
the entirety of their monthly payments would go to paying down their
principal balances for five years. Coordination with the bankruptcy
process would make these reductions more likely to succeed than other
types of loan modifications, while also limiting the program to those
who truly need it and avoiding the administrative failures that have
plagued many other initiatives. Such a plan could be implemented for
mortgages held by Fannie Mae and Freddie Mac, as we believe that such a
plan would be entirely consistent with FHFA’s obligation to minimize
taxpayer losses in the Enterprises. This plan could also be implemented
as part of the nationwide settlement currently being negotiated by a
group of state attorneys general.”
The
endorsement by the California delegation of the PPP signals a growing
recognition among policymakers that Chapter 13 bankruptcy is an
appropriate forum for addressing the foreclosure crisis. On Thursday,
the Democrats on two House Committees -- Judiciary and Oversight and Government Reform
– included mortgage modifications in bankruptcy court (such as the PPP)
as an approach to fixing the housing market and the broader economy in
their suggestions submitted to Congress’ deficit reduction committee.
And, in correspondence last month with Members of Congress, Edward
DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA),
said NACBA’s PPP has “some attractive features” and indicated that he
has instructed his legal staff to study it further.
A
number of NACBA members have taken the time to meet with their
lawmakers in recent weeks and months, either in Washington, at home, or
both, impressing upon them the harsh realities our clients face when it
comes to dealing with mortgage servicers in the hope of saving their
home from foreclosure. A growing number of lawmakers have agreed to
lend support to the PPP and to be helpful in any way they can to see it
implemented.
If you have not already
joined in this outreach effort, we encourage you to do so. While our
team in Washington does a terrific job representing us before lawmakers
and staff, there is no substitute for hometown constituents providing
the local perspective on these issues. The relationship you will build
with your lawmakers will go well beyond the current foreclosure crisis
and be of tremendous help as we tackle other issues, such as student
loans and fraudulent mortgage claims. At the local level, our issues
become personal and we have an opportunity to illustrate the impact of
policy decisions on everyday people. Angie and Zach, working with our
legislative team in DC, are poised to help you set up a meeting and
support you throughout the process. Please contact Angie Thies-Huber, NACBA’s Field Director at (614) 929-5375 and Zach Manifold, NACBA’s Field Coordinator at (614) 317-7180.
Thank you for your support of NACBA!
Ike Shulman
NACBA Legislative Committee Chair
P.S. More information about the Principal Paydown Plan is available here.
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