AmericanForeclosures.com

November 10, 2008

How is the Democratic increased Presence in Congress and Barack Oboma Going to Affect the Housing Market and Housing Crisis?

Filed under: Uncategorized — americanforeclosures @ 10:36 pm

Now that the Democrats are the majority in the White House, what does this mean for the housing market and more importantly, the housing crisis? One influence that the increased presence of democrats in Congress will have on the housing market is increasing the odds of bankruptcy judges gaining the authority to change distressed home loans on main residences become greatly better. With new initiatives, bankruptcy judges would have numerous ways to alter mortgages to avert foreclosures. The interest rate could be lowered; payment terms could be extended from thirty years to 40, or support a reduction in the outstanding loan balance to mirror the current lower value of the home. This is known as “cram down.”

The banking industry is strongly opposed to this reform, noting that more payment would be needed to make up for the fact that loans could be modified or alerted at any time. The banking lobby is still strong despite being financially weaker.

The question for Barack and his administration is: Will they want to mess around with these laws in their first administration? Most likely not, but you never know with Barack Obama. He seems like the politician to do such a thing.

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