Yesterday the senate rejected legislation that would have given judges the authority to reduce (cram down) the principal balance of 1st mortgages on primary residences for homeowners seeking bankruptcy protection.
JMO: I think this could create a wave of foreclosures from homeowners that realize they are too far upside down to ever recover. I would love to see the statistics on the number of "walk aways" (people that can afford the payment, but have so much negative equity that they choose to abandon the home) that make up the foreclosure numbers. In my opinion, passage of the cramdown bill would have created some motivation for homeowners to keep their home.
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