Over at Washington Post, Rich Leonard has an interesting article on why it is a good idea for bankcruptcy reform for people who are facing losing their homes to be able to renegotiate their mortgage agreement. As I have said before (I think in response to one of the Presidential debates) I have no problem if people renegotiate their mortgage agreements, I simply don't believe the purchase price (which was freely agreed to) should be changed. Money quote:
Chapter 13 is no walk in the park. It requires public disclosure of every aspect of your life, examinations under oath by a trustee and creditors, allowing creditors to haul you into court on any objection, and relinquishment of control of your financial life for up to five years. If you falter, your case will be dismissed and you will lose the entire benefit of the bankruptcy law, including having your original contract terms reinstated. That is precisely why allowing mortgage modifications is such a good approach. It would elegantly separate those homeowners who desperately need to stay in their homes and have sufficient incomes to make reasonable payments from those investors who bet on lax regulation, easy credit and an appreciating market in buying residential properties. Those in the latter category will have no use for this process, but for the first category, it could be a powerful step back to financial stability.