Rothschild & Ausbrooks, PLLC
Nashville Bankruptcy Attorneys Get A Free Consultation Call 866-656-8909

Should Chapter 13 plans allow mortgage strip-downs? Pt.4

The securitization of mortgages was a very profitable business for many financial institutions. This created a massive demand for mortgages that could be bundled together and sold as a security on the investment market.

This is what drove the invention of the "No Income No Assets" (NINA) loans. Because the "lenders" instantly resold these loans, they had no interest or concern if a borrower could repay a single dime of the loan. They made their money on the closing costs of each transaction.

And the large investment institutions that purchased these mortgages after they were repackaged as "securities," were also going to resell them, so they had little concern. And this drove the housing industry to build ever more properties to feed the insatiable maw of this investment machine.

Of course, being little more than a dressed up Ponzi scheme, it eventually failed. But millions of borrowers  were subjected to foreclosures or were then trapped in homes that were significantly overvalued. And then the recession began, which caused tremendous job loss and income loss.

So, it does not seem all that unfair to place part of the loss of this entire fiasco back where it belongs, on the banks and other financial institutions who engaged in the conduct that was clearly questionable economically and ethically.

Millions have been left struggling with underwater mortgages or have been foreclosed and are now subjected to harassing collection calls due to a deficiency balance. If something like a principal reduction in a Chapter 13 would have allowed them to avoid this situation, which seems a far better outcome., "Philadelphia Fed: Could principal reduction save bankrupt homeowners?" Brena Swanson, December 3, 2014

No Comments

Leave a comment
Comment Information

Contact The Firm For A Free Consultation

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Rothschild & Ausbrooks, PLLC
1222 16th Avenue South, Suite 12
Nashville, TN 37212

Toll Free: 866-656-8909
Phone: 615-866-2265
Fax: 615-242-2003
Nashville Law Office Map