Consumer: Liens
| ID | Name | Group | Other | Code
Sec |
Cross
Ref | Problem
Referenced | Proposed
Solutions |
NBRC-
0002 | Jack N. Beasley | President; Liberal
Loans of Louisiana, Inc. (Credit Company) | 11/13/95 Letter from Rep. Jim McCrery | 361 | 503 | Chapter 13 plans permit debtors to retain oversecured property
without paying creditors use value. | Creditors should have option of retaining collateral in lieu of
debt. |
NBRC-
0074 | William E. Cumberland | General
Counsel; Mortgage Bankers Ass'n of America |
|
|
| Emphasis should be given to
stated Congressional goal of home ownership and recognition of
protections afforded home mortgage holders in chapter
13. | The Code provides too much room for
decisions that are not sympathetic to the manner in which home ownership
is financed. System prior to '94 amendments worked just fine. Congress
should clarify its expressed intent to provide protection to home
mortgage finance in bankruptcy. |
NBRC-
0101 | Ike Schulman | President; National
Association of Consumer Bankruptcy Attorneys | Invited Participant to numerous NBRC
meetings. |
|
| Although debtors do have the
right to cure their mortgage defaults in ch. 13, the case of Rake v.
Wade impaired debtors' ability to save their homes by requiring them to
pay interest on mortgage arrears, even if interest is not permitted by
the underlying contract or state law. The 94 Act partially addressed
this problem by reversing Rake v. Wade, but only for mortgage contracts
entered into after 10/22/94. Not only does the additional interest on
arrears make it impossible for some debtors to save their homes through
ch. 13, but it also provides creditors with an unexpected and
unjustified windfall. | NACBA recommends that
the reversal of Rake v. Wade be extended to all mortgage
contracts. |
NBRC-
0101 | Ike Schulman | President; National
Association of Consumer Bankruptcy Attorneys | Invited Participant to numerous NBRC
meetings. |
|
| A key feature of ch. 13 is the
debtor's ability to "strip down" most secured claims. Permits
debtors to repay secured creditors the value of their secured interest
through the ch. 13 plan while reducing the balance of the creditor's
claim to unsecured status. Enables many debtors to retain secured
goods, including vehicles, which, if the debtor were required to pay the
full contract balance through ch. 13 would make the plan unfeasible.
Without ch. 13 protection for the debtor, the creditor would most likely
repossess and liquidate its collateral and be left with an unsecured
claim. Instead, under ch. 13, the secured creditor receives through
plan payment of an amount which is equivalent to the expected net
recovery on a hypothetical surrender of the collateral. The strip-down
thus prevents the partially secured creditor from exercising unfair
leverage to the detriment of both the debtor and unsecured creditors.
The result is consistent with and based upon the historical treatment of
partially secured creditors' claims in bankruptcy, known as the
"bankruptcy Rule" which can be traced back to 16th century
English law. | NACBA recommends that there be
no change in the current law allowing strip-down of partially secured
claims. |
NBRC-
0101 | Ike Schulman | President; National
Association of Consumer Bankruptcy Attorneys | Invited Participant to numerous NBRC
meetings. |
|
| Under current law, ch. 13
debtors may not strip down partially secured claims of mortgage lenders
involving long-term loand where the sole security is the debtor's
residence. The limitation on the strip-down has been defended as
necessary to protect the policy of promoting home ownership by
encouraging home lenders to make purchase money loans to home buyers
without the risk of strip-down security interests. However, current law
incidentally protects non-purchase money lenders as well as purchase
money lenders, even though no public policy is furthered by such
protection. | NACBA recommends that the
bankruptcy code be amended to alow chapter 13 debtors to strip down the
claims of all non-purchase money mortgage lenders. |
NBRC-
0101 | Ike Schulman | President; National
Association of Consumer Bankruptcy Attorneys | Invited Participant to numerous NBRC
meetings. |
|
| In 1992, the Supreme Court in
Dewsnupp v. Timm, held that a chapter 7 debtor could not strip down the
claim of a partially secured consensual mortgage lender. Although the
facts in Dewsnupp were quite unique (involving a pre-Code mortgage
contract) and the Supreme Court decision itself cautioned against the
application of its holding to other factual situations, many courts have
extended Dewsnupp and severely curtailed debtors' right to strip down
other types of liens in ch. 7 cases. This extension of Dewsnupp's
holding has diminished the "fresh start" for ch. 7 debtors
intended by congress. | NACBA recommends that
the Bankruptcy Code be amended to clarify that liens, except for
consensual mortgage liens, of partially secured creditors may be
stripped down in ch. 7 and all other chapters of the bankruptcy
code. |
NBRC-
0116 | Kenneth J. Doran | Law Offices of
Kenneth J. Doran | Participated at Consumer
Bankruptcy Working Group on July 19. |
|
| Standard applied in valuation of a creditor's allowed secured
claim for property debtor wishes to retain in a Chapter 13 is
unclear. | With respect to property that a
debtor wishes to retain in a Chapter 13 case, secured claims should be
valued at a "wholesale" rate. |
NBRC-
0119 | William C. Whitford | Professor |
|
|
| Debtors who cannot afford to file a chapter 13 case do not have
the same legal rights to protect collateral from repossession as do
better healed debtors. | Provide similar
rights for secured creditors in chapters 7 and 13. |
NBRC-
0120 | Judith Elston | Chrysler Financial
Services, Toyota Motor Credit Company, Ford Motor Credit Company,
General Motors, and American Financial Services |
|
|
| Debtors who purchase new
vehicles on the eve of bankruptcy are able to obtain the new car for
less than the contract amount. | Amend the
Code to provide that secured collateral/vehicles purchased within 90
days of the petition date should be placed in the plan as a secured debt
for the full amount of the contract and at the full contract rate of
interest. |
NBRC-
0120 | Judith Elston | Chrysler Financial
Services, Toyota Motor Credit Company, Ford Motor Credit Company,
General Motors, and American Financial Services |
| 348 | 521 | Secured creditors must release
their liens in bankruptcy prematurely. | Amend
the Code to provide that a secured creditor need not release its lien in
a Chapter 13 case prior to entry of a discharge order. Amend the Code
to provide that at the time of the conversion to Chapter 7, secured
collateral should be treated as if a Chapter 7 had been filed (thereby
triggering the requirement that the debtor file a statement of
intention). |
NBRC-
0120 | Judith Elston | Chrysler Financial
Services, Toyota Motor Credit Company, Ford Motor Credit Company,
General Motors, and American Financial Services |
|
|
| Varying applications of the
Bankruptcy Code to secured creditors decreases predictability and
increases transactions costs. | The Code
should be amended to specify when confirmation of Chapter 13 plans will
take place, when adequate protection payments will be made, and require
secured creditors to be paid concurrently with administrative and
priority creditors. Adequate protection payments should cover the
depreciation of the collateral/vehicle or a statutory 2% of the secured
value. Creditors who have repossessed collateral prior to the petition
date should be allowed to keep the collateral without penalty of
violating the automatic stay until adequate protection payments have
begun. |
NBRC-
0120 | Judith Elston | Chrysler Financial
Services, Toyota Motor Credit Company, Ford Motor Credit Company,
General Motors, and American Financial Services |
| 506 |
| Undersecured creditors are not
entitled to interest on their undersecured claim between the petition
date and confirmation or effective date. Thus, undersecured creditors
are irrevocably harmed and the Chapter 13 debtor receives a
windfall. | Modify § 506(b) to state that
interest begins accruing on secured claims and the secured portion of
undersecured claims upon the petition date, not the effective date of
the plan. |
NBRC-
0120 | Judith Elston | Chrysler Financial
Services, Toyota Motor Credit Company, Ford Motor Credit Company,
General Motors, and American Financial Services |
| 506 |
| Valuation of property on which
secured creditors hold liens varies wildly by
jurisdiction. | Amend § 506 to provide
that personal property retained by debtors during bankruptcy should be
valued at the replacement value (as it would have been at the time of
the petition), without deduction for sale costs. |
NBRC-
0120 | Judith Elston | Chrysler Financial
Services, Toyota Motor Credit Company, Ford Motor Credit Company,
General Motors, and American Financial Services |
| 362 |
| The automatic stay is
inconsistently applied, thereby decreasing predictability and increasing
expense for secured creditors attempting to obtain a lift of the
stay. | The Code should be amended to provide
that the automatic stay hearing be conducted within 30 days from the
date the motion is filed. If there is no opposition, no hearing should
be required and an order entereed. If no decision is rendered in the
30-day period, the stay should be automatically lifted. |
NBRC-
0133 | William E. Cumberland | General
Counsel; Mortgage Bankers Ass'n of America |
|
|
| Congress has a priority of
widespread home ownership and the intricate system that finances home
ownership. Courts continue to try and thwart this priority. See Lomas
Mortgage (first cir.) and In re Johns (third cir.). The Code as
currently drafted provides room for decisions that are not sympathetic
to the manner in which the home finance system actually
works. | Clarify that home mortgages may not
be modified. NBRC should recommend that Congress clarify its expressed
intent to provide protection to home mortgage finance in bankruptcy
proceedings. |
NBRC-
0123 | Henry J. Sommer | National Bankruptcy
Conference | Submitted report entitled
"Reforming the Bankruptcy Code" | 506 |
| Lien stripping law in Chapters 7 and 13 is not
uniform. | Permit a Chapter 7 debtor to use
§ 506 to strip down a lien on any collateral and, for loans secured
by a lien on consumer goods or on the debtor's principal residence, the
bankruptcy court should be empowered to determine the resulting terms of
the lending agreement with respect to the time and amount of payments by
the debtor to satisfy the lien indebtedeness. |
NBRC-
0123 | Henry J. Sommer | National Bankruptcy
Conference | Submitted report entitled
"Reforming the Bankruptcy Code" |
|
| The 1994 amendments only partially overrruled Rake v. Wade. This
decision cost almost every Chapter 13 debtor desiring to save a home
from foreclosure thousands of dollars of additional interests on
interest, and interest on other fees and charges. | Amend the Code to clarify that when a default on a long-term
obligation is cured under a chapter 12 or 13 plan, interest and other
costs shall be payable only if, under the contract and applicable
nonbankruptcy law, such interests and costs would have been paid in a
nonbankruptcy cure of the default. |
NBRC-
0123 | Henry J. Sommer | National Bankruptcy
Conference |
| 1325 | 722 | Case law is confused regarding valuation of property and interest
rates in chapter 13. | Clairfy the Code to
provide that, for purposes of giving creditors present value under
§ 1325(a)(5)(B), the appropriate interest rate is one which
approximates the creditor's cost of funds, and should be, presumptively,
the prime rate of interest. The Code should be clarified to provide
that collateral should be valued for purposes of sections 1325(a) and
722 based upon the amount the secured creditor would realize if it were
permitted to liquidate the property, taking into account costs of sale,
i.e. at wholesale value. |
NBRC-
0152 | Kenneth L. Robinson | President;
National Ass'n of Federal Credit Unions |
|
|
| Problem of lack of uniformity in
automobile valuation. Valuation is inconsistent throughout the
country. | Many jurisdictions value cars at
blue book value, however, blue book value does not always reflect actual
condition of the car or price vehicle will command on the market. A
more just representation of a vehicle's worth is the retail value.
Courts can arrive at retail value by using a general purpose vehicle
pricing guide. |
NBRC-
0223 | Frank R. Kennedy | Professor, Michigan
Law School; former Executive Director, Commission on the Bankruptcy Laws
of the United States (1973) | List of
additional recommended topics for consideration |
|
| The 1973 Commission concluded that the Bankruptcy Act did not
contain adequate provisions dealing with statutory liens. The
Bankruptcy Reform Act of 1978 fell far short of curing these
inadequacies. | Bankruptcy Code should be
amended to address the inadequacies of the statutory lien provisions
(author does not provide further detail). |
NBRC-
0223 | Frank R. Kennedy | Professor, Michigan
Law School; former Executive Director, Commission on the Bankruptcy Laws
of the United States (1973) | Cover letter
discussing various areas of concern |
|
| Author provides a list of 30 "Topics for Consideration by
Commission on Bankruptcy Laws." The recommended topic relating to
liens was:
Statutory liens | None. |
NBRC-
0228 | Vicent P. Zurzolo | Bankruptcy Judge
(C.D. Cal.) | Article in "Bankruptcy
Court Decisions" about a survey conducted by members of the
American Bankruptcy Institute | 506(d) |
| "Does the decision of the Court in Dewsnup v. Timms, 502
U.S. 410, 112 S.Ct. 773 (1992) apply in all chapters so that liens
cannot be avoided simply because the lienholder is
undersecured" | None
provided. |
NBRC-
0320 | Robert M. Zinman, on behalf of the Bankruptcy
Institute | American Bankruptcy Institute
("ABI") | Numerous position papers,
memoranda and research material | 1322(b)(2) |
| The author attaches a white paper by Janna L. Countryman entitled
"Mixed Collateral Under § 1322(b)(2)". The paper
summarizes cases that address bifurcation of mortgage
liens. | None. |
NBRC-
0334 | Vicent P. Zurzolo | Bankruptcy Judge
(C.D. Cal.) |
| 506(d) |
| The author poses the following question about the treatment of
liens: "(1) Section 506(d) -- Does the decision of the Court in
Dewsnup v. Timms, 502 U.S. 410, 112 S.Ct. 773 (1992) apply in all
chapters so that liens cannot be avoided simply because the lienholder
is undersecured" | None. |
NBRC-
0334 | Vicent P. Zurzolo | Bankruptcy Judge
(C.D. Cal.) |
| 365 |
| The author poses the following question about the treatment of
leases: "Does the rejection of a lease pursuant to 11 U.S.C.
Section 365 constitute a termination of the lease and all benefits that
go with it" | None. |
NBRC-
0335 | Kirk Swinney | Attorney |
| 724(b) |
| The author represents Texas local ad valorem tax jurisdictions in
bankruptcy courts, and notes that in Texas ad valorem taxes are
protected by a senior lien on all property taxed, recognizing the
extreme importance of the tax base to local jurisdictions. The effect
of § 724 is to totally upend the state ordered property rights at
the expense of the local jurisdictions which have provided police
protection, fire protection, education, roads, a judicial system, and
all other forms of local government that enhance the value of the taxed
property. | Section 724(b) of the Bankruptcy
Code should be repealed. |
NBRC-
0337 | Jonathan V. Maxwell | County Attorney,
Guilford County, North Carolina |
| 724(b) | 505 | In recent years, the author has
observed an increase in a number of situations where creditors, often
unsecured, "gang up" on the Tax Collector in order to deprive
the Tax Collector of the preferred status he is afforded by state and
bankruptcy laws. Section 724 and to a lesser extent § 505 are
being used in creative ways to circumvent the preferred lien status
given to tax liens. | Section 724(b) should be
repealed, or at least amended to prevent this section from being used to
deprive the Tax Collector of preferred lien status. |
NBRC-
0461 | Win Lievsay |
Private citizen |
| 1123(b)(5) | 1322(b)(2) | "Resolving in favor
of a debtor's fresh start the intracircuit and intercircuit judicial
controversy on 11 USC 1123(b)(5) and 11 USC 1322(b)(2) as regards what
constitutes 'additional security' that is not a debtor's primary
residence." Author is currently in bankruptcy proceedings and
fighting to keep his house. He asserts it is ironic that while the
creditor fights on principle to take the house, if debtor prevails
everyone will be better off. | "The code
must be changed to eliminate this anomoly." |
NBRC-
0541 | Dean S. Cooper | Associate General
Counsel, Federal Home Loan Mortgage Corporation ("Freddie
Mac") |
| 1322(b)(2) |
|
| "If the Commission is
inclined to modify existing section 1322(b)(2), we suggest that home
improvement loans be given the same protection against cramdowns as
purchase money mortgages and refinances of such mortgages under the
Working Group's proposal." |
NBRC-
0582 | Fred Thompson | United States Senator,
Tennessee |
|
|
| Senator Thompson writes on behalf of a consituent, Ray Berryman,
who owns a used car dealership in Jackson, Tennessee, and who has
complained of sizeable litigation costs incurred while attempting to
recover property under current bankruptcy laws. | Author wanted a letter responding to Mr. Berryman's concerns, and
for his comments to be kept in mind as the Commission prepares its
report to Congress. |
NBRC-
0583 | John C. Akard | Bankruptcy Judge,
Northern District of Texas | Six other letters
of the same date dealing with Chapter 13 issues. |
|
| Under Federal Rule of Bankruptcy Prodecure 3002(a), only
unsecured creditors are required to file a claim....Administrative
difficulties are created when the secured creditor does not file a
claim." Chapter 13 trustees would like verymuch tohave a
requirement that secured creditors file a claim within a specified time.
But what happens if the car creditor does not file within the specified
time | Author sympathizes with the trustee's
desire for administrative ease; however, "[w]ithout some very
detailed and definitive rules, [author is] afraid a requirement that
secured creditors file claims by a particular time would result in more
problems than it solves." |
NBRC-
0605 | Kenneth L. Robinson | President,
National Association of Federal Credit Unions
(NAFCU) |
|
|
| If creditors believe their liens are not secure, as the result of
a possible bankruptcy filing, they are more likely to increase the cost
of these loans and less likely to make home equity
loans. | Non-purchase money liens against an
individual's home shold be treated like all other secured
debt. |
NBRC-
0694 | James H. Cossitt | Attorney |
|
|
| In the Final Report of the National Bankruptcy Conference's Code
Review Project, issued 5/1/94, the Conference recommended that chapter 7
debtors should be able to "strip down" liens under §506
and the In re Dewsnup be overruled. The Conference articulates sound
reasons for this proposal which the NBRC ought to give more
consideration in formulating it's consumer
proposals. |
|
NBRC-
0697 | Jo White | Law Clerk to Judge John C.
Akard, U.S. Bankruptcy Court, Northern Distric of
Texas |
|
|
|
| "A change in the Code to
permit debtors to treat nonpurchase money liens against the home like
all other secured debt is a good way to make sure the debtor is not
paying second and third mortgages that exceed the home's value. It is
not necessary to institute a uniform income-based repayment plan in
order to allow debtors to deaccelerate and cure." |
NBRC-
0726 | Ken Crone, Saul Eisen, Hank Hildebrand, Ike
Shulman | American Bankruptcy Institute
Consumer Bankruptcy Reform Forum |
| 722 | 1325 | How should rent-to-own
contracts, which do not fit neatly into the definition of
"lease" or "sale" be treated | These types of obligations should be recharacterized as
installment sales to allow the treatment as afforded under the
applicable provisions of the code; however, this must be crafted in a
manner to avoid any negative impact on "true leases." This
could be done by treating the transaction as an installment sale for
purposes of bankruptcy by amending Section 365. |
NBRC-
0729 | Gerald L. White & Gary H. Gale | Attorneys, White & Gale |
|
|
| "The IRS liens attach to
all of a debtor's assets held as of the date of filing, even if the
underlying debt is subject to discharge. It doesn't make sense that the
lien attaches to assets that aren't subject to levy under Internal
Revenue Code provisions. It works an extreme hardship to debtors who
have a retirement plan. In a chapter 7, even if the debtor is not
entitled to withdraw retirement benefits without penalties the IRS takes
the position it can force a withdrawal, including any amounts the debtor
can borrow, by enforcing its lien. The IRS then charges the taxpayer
for any penalties and tax on the seized funds! In a chapter 13, the
lien value has to account for the present discount value of the
plan." | "...these policies severly
limits [sic] the ability of retirees to support themselves and should be
re-considered." |
NBRC-
0730 | Thomas C. Leduc | Director of
Regulatory Issues, Michigan Credit Union League |
|
|
| "Under Chapter 13, secured
creditors are only treated as secured up to the value of their
collateral. In other words, the secured debt is "crammed
down" to that value (and the balance is treated as an unsecured
claim)." | "The Taks Force
Recommends that the debtor's ability to cram-down secured debts in
Chapter 13 should be removed from the Code." |
NBRC-
0753 | Neil J. Fogarty | President, Consumers
League of New Jersey | Fact summaries of 4
cases; 2 copies of Lease Agreement and Consumer Lease Disclosure
Statement. |
|
| Written copy of testimony before
Commission. Speaker addressed the issue of "Rent to own,"
which he said "is a retail installment sale pretending to be a
lease", quoting the Superior Court of NJ. | "The Bankruptcy Code should treat rent to own in law
according to its economic reality: RTO is a credit sale, with a
security interest, at usurious interest rate, under deceptive
circumstances." |
NBRC-
0766 | Gary Klein | National Consumer Law
Center, Inc. | Copy of article by Professor
Julia Patterson Forrester in "The Brief" of the Southern
Methodist University Law School, entitled: Home Equity Financing: Is
the Federal Government Mortgaging the American Dream"; and,
package of recent home equity loan transactions; | 506(a), (d) |
| Author is forwarding article on home equity lending, as well as a
package of recent typical home equity loan transactions which have
driven the borrowers involved into bankruptcy. "The process of
limiting a security interest to the value of the creditor's collateral
pursuant to 11 U.S.C. § 506(a), (d) is a well thought out balancing
of the relative rights of secured and unsecured creditors as well as a
key provision of the fresh start for consumers who own
homes." | "I hope the Commission
will not recommend a substantial exception to the rule allowing
stripdown of secured claims which is broad enough to apply to high rate
home equity loans." |
NBRC-
0768 | Alan Olsen | Manager/Treasurer,
Evergreen Federal Credit Union |
|
|
| Author opposes permitting
debtors to strip-down or cram-down values on collateral such as
automobiles and junior lien mortgages because it would have a
detrimental affect on all borrowers by raising interest rates to pay for
potential losses, lowering lending limits on collateral to ensure that
the financial institution is protected or possibly eliminating small
institutions from granting any such type of loan because they can't
afford to risk the huge losses this proposal would grant to
borrowers. | Do not allow debtors to cram-down
value on collateral. |
NBRC-
0789 | John Bechtholt | CEO, TAPCO Credit
Union |
|
|
| Author is concerned by the proposal that would treat subsequent
mortgages differently from first mortgages. "We do not use second
mortgages as a subtitute for an unsecured line of credit. Frequently
the purpose of the loan is for home improvement. The member must meet
our lending parameters and there must be sufficient equity in the
property....Modification of our rights, such as 'lien stripping,' would
certainly affect our lending program in this area....The threat to 'lien
strip,' even if we are adequately protected by sufficient equity, could
trigger expensive valuation litigation." | No specific solution proposed. |
NBRC-
0794 | Karen Cordry | Bankruptcy Counsel,
National Association of Attorneys General (NAAG) (comments are her own,
however, because there was not enough time to review the issues in depth
with the Attorneys General) |
|
|
| With regard to the treatment of
conversion claims, author "generally agree[s] with the thrust of
this provision and the related provisions in the consumer bankruptcy
proposal. They obviously seek to strike a reasonable compromise between
the creditor's right to protect a true security interest, and the
debtor's right not to be harassed or coerced with respect to 'security
interests' taken in goods which could not reasonably be viewed as
supporting any asset-based collection activities. The states were
concerned with these issues with respect to the controversy involving
Sears and its efforts to obtain reaffirmation
agreements." | "I take no position
on whether the $500 per item value is an appropriate amount (to
determine whether the creditor truly views the goods as supporting any
asset-based collection activities), but the proposal might also want to
consider some cumulative minimym as well. A debtor who buys and resells
ten $490 VCRs the week before filing bankruptcy is probably guilty of
conversion even if each individual purchase was for less than
$500." |
NBRC-
0804 | Robert R. Weed | Attorney, Law Office
of Robert Ross Weed |
|
|
| "The general rule in
bankruptcy is that the creditor receives the value of his secured
interest. The exception giving more than the value in Chapter 13 to
home mortgages is supported by public policy concerns about the mortgage
industry. Those concerns do not apply to under secured second
mortgages." Second mortgage lenders whose loan amounts fall within
the value of the mortgaged property do not have to worry about a lien
stripping provision, only those who lend for more than the value of the
property at exhorbitant rates. There is no public policy which would
justify an exception for the latter type of lender. | "I also agree strongly with the lien stripping of second
mortgages in Chapter 13." |
NBRC-
0804 | Robert R. Weed | Attorney, Law Office
of Robert Ross Weed |
|
|
| "You may know there is a
substantial body of opinion among the debtor bar that says we should
advise the client to ignore all claims that retailers are secured, and
simply deal with the very rare action in replevin when they arise. I
don't think that's consistent with our position as officers of the
court, but it gives a competitive advantage to attorneys who follow that
policy compared to attorneys that feel these claims need to be
negotiated or litigated." | "The
$500 compromise on purchase money security interests also seems
reasonable." |
NBRC-
0806 | Jill M. Sturtevant | Assistant General
Counsel, Bank of America |
|
|
| Bank of America opposes the
Commission's proposal to allow liens on homes other than first mortgages
and refinanced first mortgages to be stripped. Among other problems,
this proposal will result in increased rates and harsher credit
underwriting which will harm consumers seeking to obtain home equity
financing. | "If the intention of this
proposal is to discourage lenders from knowingly lending over the value
of the property, then the stripdown shoule be based on the property's
appraised value at the time of the loan, rather than the present value
of the property at the time of filling." Also, the non-stripped
portion of the loan should be paid pursuant to the original contract
terms for interest rate. |
NBRC-
0806 | Jill M. Sturtevant | Assistant General
Counsel, Bank of America |
|
|
| "Bank of America opposes
the Commission proposal's use of unequal standards for determining the
value of collateral." | "We urge the
Commission to codify the "replacement value" rule recently
decided by the U.S. Supreme Court." |
NBRC-
0806 | Jill M. Sturtevant | Assistant General
Counsel, Bank of America |
|
|
| The Bank of America opposes the
proposal to void security interests on collateral worth $2500 or
less. | Secured creditors whose collateral
secures principal balances as of the day of filing that are less than
$500 would have the option to choose whether to take their collateral
back, or to be treated as unsecured. No reaffirmations or surrenders
would be permitted. |
NBRC-
0811 | Sharon Kelly | President, Alaska State
Employees Federal Credit Union |
|
|
| "The [Consumer Bankruptcy
Working] Group's proposed reform would...treat non-purchase money
mortgages like any other secured debt. This would mean the amount owed
to second mortgage holders could be crammed down if the property value
had dropped below the total amount owed. This practice has already been
abandoned once with great success and we are unclear why there is now an
attempt to bring it back. In effect, this proposal would only hurt
lenders who are trying to help individuals consolidate debt and
therefore avoid bankruptcy in the first place. Surely the Commission
does not want to create law that will diminish debtors' alternatives to
bankrutpcy." | "We encourage the
Commission to leave...mortgages unchanged." |
NBRC-
0812 | Bernard S. Via, III | Attorney, Via
& Frye |
|
|
| Why should the creditor get more in value for the collateral in a
chapter 13 than they would if there was a repossession and sale at
auction value. | "Secured interest should
follow the test of what they would get if the debtor was in chapter 7,
that being less than retail value. At least no more." |
NBRC-
0832 | Arthur S. Weissbrodt | U.S. Bankruptcy
Judge, Northern District of California |
|
|
| Author supports the Commission's
proposals regarding the stripping down of second and third home loans.
"A basic principle of bankruptcy is that a secured creditor is only
secured to the extent of the value of the creditor's collateral. Second
and third home loans should be no different." | Second and third home loans should be stripped down, as well as
refinanced first loans. |
NBRC-
0841 | Wendell J. Sherk | Attorney |
|
|
| "Regarding the revocation of those security interests, the
$500 threshold in the draft sent out seems
reasonable." | "As with most
specific dollar amounts in the Code, I suggest it is appropriate that
this one be subject to inflation adjustment." |
NBRC-
0841 | Wendell J. Sherk | Attorney |
|
|
| "The ability to cramdown home equity and other second
mortgages will alleviate some very abusive lending tactics. I respect
the §1322(b)(2) balance in favor of protecting the market for home
mortgages. I do not understand why a new lender who is doing nothing to
create a market for home loans - thus furthering the ploitically
important American dream of home ownership - should not be subject to
exactly the same cramdown as any other asset-based
lender." | N/A |
NBRC-
0846 | Paula E. Langguth | Author, Bounce Back
From Bankruptcy, Pellingham Casper Communications,
LLC. |
|
|
| Author agrees that "[c]reditors' petitions for a purchase
money security interest should be granted if the item's value is $500 or
greater and not granted if the value is less than
$500." |
|
NBRC-
0849 |
Ron Haas |
Chairman, Bankruptcy Task Force, Alabama Credit Union
League |
|
|
11 |
"Recently, in the Associates Commercial Corp. v.
Rash case, the United States Supreme Court finally ruled on the issue of
cramdowns. Hopefully, the commission will now abandon its proposal that
automobiles and other personal property be valued at an average between
wholesale and retail value." |
The Commission should recommend that Congress codify
the Supreme Court's ruling requiring retail value when collateral is to
remain with the debtor. |
NBRC-
0874 | Robin L. Lamb | Author writes on behalf
of the Board of Directors, Staff and Credit Committee of Allsteel
Employees' Credit Union. |
|
|
| A standard for valuation is
needed. | "A mean between wholesale and
retail valuation on collateral would be acceptable if there was a
standard used....The standard should be published and know [sic] to both
the debtor and creditor prior to entering into a credit agreement. Both
the debtor and creditor should have some recourse at the time of filing
if they feel the valuation is not fair." |
NBRC-
0883 | Eugene R. Wedoff | U.S. Bankruptcy
Judge, Northern District of Illinois |
| 521(2),
522(f) |
| The
proposal makes clear that to retain collateral in a Chapter 7, debtor
must: 1) redeem the property; 2) become current and 'ride through'; or,
3) obtain creditor's waive of default and ride through. Also,
"[a]lthough if may be implied, the Proposal does not state that the
lien avoidance spedified for household furnishings and similar
collateral will continue to be limited to property claimed exempt by the
debtor." Finally, it may well happen that purchase money loans
are extended to allow a debtor to purchase a collection of items (such
as rare booke, colletible coins, or tools/appliances) that are
individually worth less than $500 but are collectively quite
valuable. | If debtor fails to exercise one of
these options within 30 days, creditors should be allowed an expedited
procedure for relief from the automatic stay. Also, lien avoidance
under §522(f) should continue to be limited to property that the
debtor claims as exempt. Finally, the $500 limit for purchase money
security interests should not apply to separate items of a
collection. |
NBRC-
0883 | Eugene R. Wedoff | U.S. Bankruptcy
Judge, Northern District of Illinois |
|
|
| The Proposal should set forth a
valuation standard based on a rationale consistent with underlying
policy. "The relevant policy, I believe, is that secured creditors
should be allowed the net amount they could reasonably obtain from their
collateral under relevant nonbankruptcy law, and that any value in the
estate beyond this amount should be shared by unsecured creditors
according to the priorities set out in the
Code." | "...the standard state by
the Proposal for real property should apply to all
collateral." |
NBRC-
0884 | Norma Hammes | President, National
Association of Consumer Bankruptcy Attorneys |
|
|
| "The current proposal would
not allow the strip-down of an abusive, high-interest complete
refinancing of the debtor's home." Such mortgages are often
abusive. | The proposed Consumer Framework
should provide for the strip-down of all on-purchase
mortgages. |
NBRC-
0884 | Norma Hammes | President, National
Association of Consumer Bankruptcy Attorneys |
|
|
| Valuation of secured
claims. | "The review of this issue
should be set aside pending the U.S. Supreme Court decision in
Associates v. Rash, expected by the end of June, 1997. NACBA continues
to believe that valuation of secured claims should be set at the
creditor's expected net recovery upon a hypothetical repossession of the
security." |
NBRC-
0885 |
Ronald Barliant |
U.S. Bankruptcy Judge |
|
522(f) |
|
"The proposal to amend §522(f) to require
creditors to petition for continued recognition of purchase money
security interests in certain personal property is generally a good
idea, but the $500 limit is much too low and not well focused."
Such interests "should be allowed only when the grant of the lien
was important to the decision to extend credit in the first
place." |
"I suggest that the creditor be required to show a
liquidation value for each item of at least $1,000 after deducting costs
of repossession and sale." |
NBRC-
0886 | William J. Perlstein | Attorney |
| 1322(b)(2) |
| Author is concerned about the proposal to limit the protection of
section1322(b)(2) to first mortgages and refinanced first mortgages.
"This is, we submit, an artificial distinction without a
substantive basis in law or policy." "The creation of a
protected class of 'refinanced first mortgages' is guaranteed to lead to
substantial litigation, just as has happen whenever legislation has
tried to limit protections to purchase money loans." "It
seems particularly ill-advised to amend the bankruptcy laws in a way
that is harmful to lenders and borrowers to attack what is, at bottom, a
consumer protection issue" namely, the misuse of §1322(b)(2)
protections by some unscrupulous home improvement companies. "The
elimination of these protections for some home mortgages will force
lenders to underwrite and price these loans as unsecured loans, making
them more expensive to some borrowers and unobtainable to others."
"The ability to strip down a secured loan is a serious problem...in
the case of a home mortgage, since a home fluctuates in value over
time." | "Rather than reducing the
protections of section 1322(b)(2), the provisions of that section should
be expanded to include in 'real estate that is the debtor's principal
residence' fixtures, escrow accounts and other related collateral that
are customarily part of a home mortgage transaction." |
NBRC-
0896 | Samuel L. Bufford | United States
Bankruptcy Judge, Central District of California |
|
|
| "It is not always the case
that property that is fully encumbered with secured debt should be
abandoned to the secured creditor(s). There are circumstances where it
is in the best interests of the estate, and sometimes even of the
debtor, for the trustee (or the debtor in possession) to sell the
property, rather than abandon it to the secured creditor. This
situation occurs when there is reason to believe that an auction sale
will produce a substantially higher prpice than the trustee is able to
obtain by marketing the property privately." | "I think that the Bankruptcy Code needs to preserve
flexibility for the court to determine how to proceed with respect to
such property in each case, in light of the individual facts of the
case." |
NBRC-
0898 | James H. Shenwick | Attorney |
|
|
| Under the "best interest of the creditors test" in a
case involving the valuation of the debtor's home, can such costs as the
broker's commission, real estate transfer taxes, federal income taxes,
etc. be deducted from the equity the debtor has in the home to determine
the equity value to be paid to creditors, or not | Author urges that the Commission develop a uniform set of rules
to determine how chapter 13 collateral should be valued. |
NBRC-
0903 | Jill M. Sturtevant | Assistant General
Counsel, Bank of America |
|
|
| Author writes to comment on the
ABI Working Group Proposals. "The proposal appears acceptable but
is silent on what hapens upon plan default to secured debt that had been
srammed or stripped down by the chpater 13 plan. Obviously, unless the
creamdowns and stripdowns disappear upon default of the plan, the Bank
CANNOT [emphasis in original] support this
proposal." | All secure debt goes back to
square one (as it would have been in a chapter 7) if the chapter 13 plan
is converted to a chapter 7, dismissed, or closed without
discharge. |
NBRC-
0903 | Jill M. Sturtevant | Assistant General
Counsel, Bank of America |
|
|
| Author writes to comment on the
ABI Working Group Proposals. Author is concerned about the effect of
allowing junior mortgage liens to be stripped down. Author is also
concerned about how the debtor will pay back the remaining secured
portion of the lien, since this is not dealt with in the
proposal. | Author could support the NBRC
proposal to allow the strip down of junior mortgage liens, provided
certain, provided certain enumerated provisions existed in the process.
However, author sees no justification for cramming down other terms on
the junior lender. |
NBRC-
0917 | Tyler F. Parker and Stacy S. Augustine | Senior Vice President and Director of Governmental Affairs,
respectively, of the Washington Credit Union League &
Affiliates |
|
|
| "The second cause of concern among our member credit unions
pertains to the permissibility of permitting the strip down of
non-purchase money mortgage loans under a Chapter 13 repayment
plan." "...there is an important distinction between
permitting the strip-down of debts securing personal property, and
permitting the strip-down of debts securing real property. While
personal property generally depreciates in value, real property often
appreciates in value. Second and third mortgages are underwritten with
the expectation that property values will rise." Permitting
strip-downs of second and third mortgages will result in higher loan
rates and more stringent risk analysis standards. | Do not permit the strip-down of second and third
mortgages. |
NBRC-
0925 | C. Michael Stilson | Bankruptcy Judge,
Northern District of Alabama, Western Division |
|
| 11 | Author feels that the
"substantial" changes proposed to the Bankruptcy Code are not
necessary, and that remedies already exist for most of the problems
addresed by the Consumer Bankruptcy Working Group. Author addresses
each proposal of the Working Group. It is proposed that certain items
worth $2,500 or less for each item shall be deemed unsecured. "It
is not clear to me if this proposal is to be used under the current
§522(f) lien avoidance provisions for non-purchase money security
interest and judgment liens, or if it is meant to apply to all loans,
purchase money and non-purchase money. Either proposal would be an
improvement in the exemptions available to debtors in
Alabama." | N/A |
NBRC-
0925 | C. Michael Stilson | Bankruptcy Judge,
Northern District of Alabama, Western Division |
| 1322(b)(2) | 11 | Author feels that the
"substantial" changes proposed to the Bankruptcy Code are not
necessary, and that remedies already exist for most of the problems
addresed by the Consumer Bankruptcy Working Group. Author addresses
each proposal of the Working Group. Author views as a positive change
the proposal to allow Chapter 13 debtors the opportunity to deaccelerate
and cure a mortgage in default and limiting the restrictions in seciton
1322 (b)(2) to first mortgages and refinanced
mortgages. | N/A |
NBRC-
0925 | C. Michael Stilson | Bankruptcy Judge,
Northern District of Alabama, Western Division |
|
| 11 | Author feels that the
"substantial" changes proposed to the Bankruptcy Code are not
necessary, and that remedies already exist for most of the problems
addresed by the Consumer Bankruptcy Working Group. Author addresses
each proposal of the Working Group. "This proposal (on other
secured debt) offers no change from existing law but for the fact that
it would adopt a national standard for valuation of property and
proposes an interest rate for determining the future value of a secured
creditor's claim. These changes would be an improvement so long as both
standards were presumptive and could be varied by individual bankruptcy
courts to fit individual facts." | N/A |
NBRC-
0934 | Jean Braucher | Professor of Law,
University of Cincinnati College of Law | Jean
Braucher, "Counseling Consumer Debtors to Make Their Own Informed
Choices--A Question of Professional Responsibility", 5 Am. Bankr.
Inst. L. Rev. 165 (1997). |
|
|
| Author supports the proposal to
codify the ride-through in chapter 7 of secured debts not in default
because it would help debtors who have kept current on home and car
loans but who have incurred unmanageable unsecured debts. |
NBRC-
0936 | Joe Irish | Collections Officer, Fergus
County Federal Credit Union |
|
|
| "You recommend a permit
'ride-through' of secured asset." "If you give them a permit
to ride-through and expect them to treat this debt the same as a
reaffirmation, you may find they do not." "If they are
allowed to keep our collateral and not be responsible to repay the debt,
we have no recourse to collect our debt if they decide not to make
thheir scheduled monthly payments." | No
specific solution proposed. |
NBRC-
0936 | Joe Irish | Collections Officer, Fergus
County Federal Credit Union |
|
|
| "You recommend a permit to
'cramdown' second mortgages." "You allowing the member a huge
opportunity to watch the market and stick it to his creditors when the
market conditions dictate to do so." | No
specific solution proposed. |
NBRC-
0955 | ABI Consumer Bankruptcy Reform Forum | American Bankruptcy Institute | Letter
from Jill M. Sturtevant, Assistant General Counsel, Bank of America Re:
ABI Consumer Forum Contribution dated June 4, 1997; Letter from Dean S.
Cooper, Associate General Counsel, Freddie Mac, Re: Freddie Mac's
Comments on ABI Consumer Bankruptcy Working Group's Proposal on Repeat
Filings dated May 21, 1997. |
|
| The ABI sponsored a Consumer Bankruptcy Reform Forum which met
twice. The goal was to create a process, rather than to produce a
spedific set of proposals. This report was prepared by four members to
summarize the events of the second meeting held May 15, 1997. It
contains options considered for and discussions of the following issues:
1. Default Discharge Option for Failing Chapter 13 Cases; 2. Chapter 13
Superdischarge; 3. Credit Report Forum; 4. Option on Repeat Filings;
5. Disposable Income; 6. Treatment of Rent-to-Own Contracts; and, 4.
Stripdown of Mortgages/Interest on Arrears. | Solutions are proposed for each issue mentioned
above. |
NBRC-
0955 | ABI Consumer Bankruptcy Reform Forum | American Bankruptcy Institute | Letter
from Jill M. Sturtevant, Assistant General Counsel, Bank of America Re:
ABI Consumer Forum Contribution dated June 4, 1997; Letter from Dean S.
Cooper, Associate General Counsel, Freddie Mac, Re: Freddie Mac's
Comments on ABI Consumer Bankruptcy Working Group's Proposal on Repeat
Filings dated May 21, 1997. |
|
| The ABI sponsored a Consumer Bankruptcy Reform Forum which met
twice. The goal was to create a process, rather than to produce a
spedific set of proposals. This report was prepared by four members to
summarize the events of the second meeting held May 15, 1997. It
contains options considered for and discussions of the following issues:
1. Default Discharge Option for Failing Chapter 13 Cases; 2. Chapter 13
Superdischarge; 3. Credit Report Forum; 4. Option on Repeat Filings;
5. Disposable Income; 6. Treatment of Rent-to-Own Contracts; and, 4.
Stripdown of Mortgages/Interest on Arrears. | Solutions are proposed for each issue mentioned
above. |
NBRC-
0956 | The Secured Creditors' Subcommittee of the Business
Reorganization Committee, American Bankruptcy
Institute | American Bankruptcy Institute
(ABI) |
|
|
| The Secured Creditors' Subcommittee submits a lengthy (104 pages)
treatise on "Selected Issues of Interest to Secured Creditors"
in which eleven (11) issues are exhaustively discussed through a review
of cases in each circuit. | Conclusions are
given at the end of each discussion. |
NBRC-
0957 | Eugene R. Wedoff | Bankruptcy Judge,
Northern District of Illinois |
| 506(a) |
| Author writes on the issue of
valuation of collateral for cramdowns. | No
specific solution proposed. |
NBRC-
0958 | G. Ray Warner | Professor, University
of Missouri - Kansas City, School of Law |
| 506(a),
1325(a)(5)(B) |
| "I am writing to implore the Commission to propose clearer
statutory guidelines on the question of valuation in bankruptcy
cases." Author discusses the Supreme Court case of Associates
Commercial Corp. v. Rash and different methods of
valuation. | No specific solution
proposed. |
NBRC-
0964 |
Lee H. Bettis |
President/CEO, AGE, Southwest Georgia's Credit
Union |
|
|
11 |
"Permitting the 'ride-through' of secured assets
is a legislative reversal of the Taylor Decision handed down by the 11th
Circuit Court on October 13, 1993. This simply allows the debtor to
keep our assets until they are fully depreciated and then walk away
without us having any recourse whatsoever." |
Do not allow 'ride-throughs'. |
NBRC-
0968 | Vincent P. Zurzolo | U.S. Bankruptcy
Judge, Central District of California |
| 506(d) |
| Author believes "that the
Commission can do a great deal of good by focusing Congress's attention
on problems arising out of 11 U.S.C. Section 506(d), Dewsnup and
Nobleman." "The fundamental question is whether a debtor,
trustee or other appropriate party in interest can cause a lien on
property of the estate or debtor to be determined void only because the
collateral encumbered by the lien, including consensually placed deeds
of trust or mortgages, is worth less than the amount of debt owed to the
holder of the lien." | None |
NBRC-
0987 | Jerry Affolter | Collection Manager,
Community America Credit Union |
|
| 10 | "If cram downs were allowed
in home equity loans, credit union bankruptcy losses would only
increase.. "This recommendation would only add additional risk to
the credit union and may ultimately result in an increase of loan
interest rates." | Do not allow cramdowns
of second mortgage loans. |
NBRC-
0988 | Perry Caligiuri | President and CEO,
First Iowa Community Credit Union |
|
|
| Author takes exception to the
proposal to eliminate security interests in property valued at less than
$500. The hearings on valuation required by the proposal would
overburden the courts. Loans for small items like refigerators may
become more difficult to find because creditors will shy away from
making unsecured loans. | "I ask the
Commission to seriously review this proposal and its potential to
increase credit costs for individuals of small financial
means." |
NBRC-
0988 | Perry Caligiuri | President and CEO,
First Iowa Community Credit Union |
|
|
| Author is concerned about the
proposal that only purchase money mortgages be protected against
valuation cramdowns. "This proposal will make home equity lending
a riskier product for lenders and thus harder to obtain for consumers,
driving up these rates and excelling bankruptcy
filings." | None |
NBRC-
0992 | Kay L. Campbell | Compliance Officer,
McDonnell Douglas West Federal Credit Union |
|
|
| However, we do not support the
proposed valuation of property in a Chapter 13 repayment plan to be set
at a median point between wholesale and
retail." | "We believe valuation of
property should be based on an appraisal." |
NBRC-
0993 | Deborah A. Kloberdans | citizen,
taxpayer, and collection officer of a Credit Union. |
|
|
| "Requiring creditors to
hire attorneys to petition the court to recognize security interests in
household items will encourage more bankruptcies!...This may alleviate
the court system of some paperwork...but it will certainly encourage
department stores such as Sears to tighten their credit requirements and
increase their interest rates to compensate for
losses!" | None |
NBRC-
0993 | Deborah A. Kloberdans | citizen,
taxpayer, and collection officer of a Credit Union. |
|
|
| Allowing cramdowns on second
mortgages and equity loans will devastate small institutions and allow
the big banks to have a monopoly on the financial
industry. | None |
NBRC-
0993 | Deborah A. Kloberdans | citizen,
taxpayer, and collection officer of a Credit Union. |
|
|
| "Most dealers charge
average retail, most consumers are willing to pay average retail, and
most lenders will lend the average retail value for
purchase...." | "Valuation of
collateral in Chapter 13 should be the average retail." |
NBRC-
1003 | Vincent P. Zurzolo | Judge, U.S.
Bankruptcy Court, Central District of California |
| 506(d) |
| "The most pressing problem
created by the Court in Dewsnupp is whether, in a case under any chapter
commenced under the Code, a debtor or a trustee...can obtain an order
woiding a portion of or an entire lien simply because the collateral to
which is [sic] attached is worth less than the debt secured by the
lien." | "Frankly, I am not
advocating that the Commission adopt the rule that such 'unsecured' or
'under secured' liens are void. Rather, I advocate that the Commission
make the fundamental rule clear to all of us who work with the Code and
this section of it on a regular basis." |
NBRC-
1006 | Cheryl L. Forsman | Attorney,
Montgomery County teachers Federal Credit Union |
|
|
| Author is concerned about the
proposal which would allow the cramdown of all non-purchase mortgages in
a Chapter 13. In such a case, the debtor "would not only be rid of
all undersecured mortgages, but would also reap the benefit of any
susequent increase in the value of the property. Not only are these
results unfair to the lender, they could negatively effect [sic] the
lender's pricing of non-purchase loans in the
future." | Do not allow cramdowns of
non-purchase mortgages. |
NBRC-
1011 | Charles E. Beam | Collection
Supervisor, K-25 Federal Credit Union |
|
|
| The U.S. Supreme Court ruled in
Rash that lien stripping would not be permitted on personal property
since creditors are entitled to the replacement value. Author does not
understand "why this issue is rearing its ugly head
again!" | No specific solution
propose. |
NBRC-
1011 | Charles E. Beam | Collection
Supervisor, K-25 Federal Credit Union |
|
|
| "In regards to unnecessary
valuation heaarings, we do not feel that requiring creditors to petition
the court to prove the value of a 'purchaase money' and/or 'non-purchase
money' security interest is merited." | "A clearly defined distinction should be drawn between
'purchase money' security interest and 'non-purchase money'
interest." |
NBRC-
1013 | Jill M. Sturtevant | Assistant General
Counsel, Bank of America |
|
|
| Author feels the commission's
concerns about 125% loan to value loans would be valid it these were
the only type of lending subject to cramdown, since Bank of America does
not make such loans. "However, the Commission's recommendation
fails to consider the impact of such cramdown provision on loans with
100% or less LTV." | "Many of the
Bank's objections owuld be resolved if the Commission revised its
proposal to state that, as a matter of law, the appraisal obtained by
the lender at the time the loan was made would be the 'value' for
purposes of cramdown." |
NBRC-
1016 | Richard T. Wargo | Compliance and
Information, Pennsylvania Credit Union League & Pacul Services,
Inc. |
|
|
| "With absolutely no empirical evidence, the Commission is
attempting to eliminate a valid security interest in consumer goods
based on its determination that collateral worth less than $500 does not
represent true asset-based lending. Whether teh collateral will provide
a return is a business decision by a creditor." "In addition,
this scheme creates a time consuming valuation
hearing." | Do not void otherwise valid
security interests just because the value of the collateral is less than
$500. |
NBRC-
1016 | Richard T. Wargo | Compliance and
Information, Pennsylvania Credit Union League & Pacul Services,
Inc. |
|
|
| "The proposal exposes secured creditors to greater risks
from cramdowns, which will impact credit standards in connection with
home-equity-type lending....Facing such undue risk, many credit unions
will be reluctant to provide credit for provident purposes unless the
credit union will enjoy first lien position." "The Commission
recommends that value, in connection with other secured debt, be set at
the median point between wholesale and retail
price." | Do not cramdown home equity
loans. "Value should be the replacement value of the collateral as
determined by the Supreme Court in Associates Commercial Corp. v.
Rash. |
NBRC-
1018 | William Cook | Vice President for
Operations and Development, State Department Federal Credit
Union |
|
|
| "We also disagree with the recommendation that only the
first mortgage holders would retain full security interests in Chapter
13 filings. 'Cramdowns' on second mortgages would allow debtors to reap
a 'windfall' profit from any subsequent increase in property values on
the home." It would also make it more difficult to get such
loans. | None |
NBRC-
1030 | Stephen W. Pogemiller | President/CEO,
Mather Federal Credit Union |
|
|
| Author takes exception to the
proposal to allow a debtor who is current on their loan to retain the
secured asset without reaffirming the debt. This allows the credit
union only the option of repossessing the collateral. "Although
the current law allows reaffirmation, our district is noted for
opposition to reaffirmation. Therefore, any pro per debtors [sic] do
not formally reaffirm, even if they want to! The result is that the
credit union loses all unsecured debt, and all deficiency balances if
the collateral is taken back." | None |
NBRC-
1030 | Stephen W. Pogemiller | President/CEO,
Mather Federal Credit Union |
|
|
| Author is not happy with the
recommendation to permit cramdowns of second mortgages. Most unsecured
debts in Chapter 13 are paid out at less than 10%, and the debtor gets
to remain in the house, with the possible benefit of a future increase
in the value of the property. | None |
NBRC-
1033 | Denise L. Caristi | President/CEO,
Granite State Credit Union |
|
|
| "Members wishing to retain
secured assets should be required to reaffirm this debt. By doing so,
the member agrees to abide by the terms of the note including
maintenance of important insurance coverages." | None |
NBRC-
1036 | Lois Baker | AVP, Loan Servicing
Manager, SAFE Federal Credit Union |
|
|
| Author does not like idea of
"ride-through" (allowing debtor to retain collateral without
reaffirmation. | Do not permit
ride-through. |
NBRC-
1036 | Lois Baker | AVP, Loan Servicing
Manager, SAFE Federal Credit Union |
|
|
| Author is against cramdown of
second mortgages. | See above. |
NBRC-
1042 | David Dilley | VP-Lending, Colorado
Central Credit Union |
|
|
| 10 | "Please do not allow second mortgage "cramdowns"
without affording the financial institution the opportunity to take
possessionof the property in Chapter 13 bankruptcies." |
NBRC-
1164 | Barbara J. Sellers | Bankruptcy Judge,
Southern District of Ohio, Eastern Division |
|
|
| "Clarification is needed on
the status of lien interests for which no collateral value exists at the
time of the bankruptcy filing. The treatment of such liens should be
uniform, and certainly legislation can be drafted to make it
so." | See above. |