During negotiations last week over the contentious loan-modification amendment, banks did win some concessions from Democratic lawmakers.The failed amendment would have given judges in bankruptcy proceedings the power to have loan terms on a primary residence renegotiated so that the owner facing foreclosure could remain in his/her home. The kicker is this provision is already law for those who own a second home, a boat, and other "big-ticket items."
“We gave [the banks] extraordinary leeway in terms of deciding whether a person could raise this in bankruptcy court,” says Senate majority whip Richard Durbin (D) of Illinois, who led the negotiations.
These included requiring that homeowners try to renegotiate terms with the bank at least 45 days in advance of seeking relief in the courts, limiting the kinds of mortgages to be covered by bankruptcy reform, and precluding homeowners from going forward in bankruptcy if the mortgage lender made a good-faith offer of renegotiation.
In the end, though, the sweeteners were not enough to win the industry’s support for the amendment. “We added all these things at the request of the banking institutions, and they said: ‘Fine, we leave. We’re not part of this.’ They walked away,” Senator Durbin says.
Courts are already allowed to write down the terms of loans on secondary homes, yachts, and other big-ticket items involved in bankruptcy proceedings, but not on an individual’s primary residence.
In other words, the wealthy are able to renegotiate better terms on their prized possessions, albeit as unnecessary as they may be, and yet less-wealthy Americans are not extended the same right when it comes to their primary residence!
Have to love the fairness. Incredible.