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January 30, 2009

Great Analysis of H.R. 200 in its Present Form

From my friend Peter Lively.  You can access his analysis here.  This looks like a handful but it really helps understand the proposal.  Printout the attachment and read it.  Its a little easier to understand.   

Variables:
C1 Certification that D received N.
C2 Certification that D attempted to contact lender for loan mod within 15 days.
C3 Certification that D attempted to contact lender for loan mod (no time required).
E Effective date of new law.
F Current FMV of R.
I Prevailing interest rate on petition date.
L Loan originating before E, secured by R, subject to N.
M All debt secured by R up to FMV.
N Notice that D receives from lender that it may commence foreclosure against R.
P Premium added to I for “risk”
R Debtor’s principal residence.
T Total debt secured by R; T = M + U.
U All debt secured by R over FMV and also debt formerly secured by R (due to TS or surrender).
X Proceeds paid to lender if property sold within 4 years of loan modification.
Y Maximum years of modified loan < or = (40 years - # years paid on existing loan).

Proposed Changes to Code:
109 Debt NOT include T, if F < $1,010,000 (plus CPI adjustments)
109 If C1, then no required CBC
502 If T subject to TILA then not an allowed claim
1322 Where petition not yet filed:
If D provides C2 (or, if TS date within 60 days of petition date) and T is ARM loan,
then Court may prohibit, reduce or delay adjustment of interest rate; OR
modify T under 506(a)(1) into M and U, then modify M over Y at I + P

Where case pending:
If D provides C3 before filing Plan or Plan Modification Motion, then Court may prohibit, reduce or delay adjustment of interest rate; OR
modify T under 506(a)(1) into M and U, then modify M over Y at I + P
BUT, if Debtor sells R, then lender gets X = the lesser of the allowed unmodified claim, and [100% - (20% * # years since loan modification)] * [Sale Price - (M + COS + Improvements)]

January 30, 2009 in Legislation | Permalink

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Comments

I have looked over your blog a few times and I love it. Very helpful. Tomas

Posted by: Loan modification agreement | Feb 16, 2009 1:12:29 AM

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