Bankruptcy Cram-Downs Being Used on Primary Residences
By Daniel Edstrom
DTC Systems, Inc.
A “cram-down” is where the principal balance is reduced, usually to fair market value. DSNews.com is reporting that the research firm and ratings agency DBRS has learned from various servicers that cram-downs are being done in some bankruptcy courts. We have seen the occasional cram-down but this shows that it is far more prevalent then most people realize. The effect of a cram-down is that the loan principal balance is reduced to fair market value and all amounts over that are “unsecured”, meaning they could be fully discharged. For example if a homeowner owes $750,000.00 on their primary residence, but the actual market value is $440,000.00, the bankruptcy court could cram-down the loan so that the actual principal balance is $440,000.00 and the rest ($310,000.00) is unsecured debt.
For more, read the DSNews.com article here: http://www.dsnews.com/articles/mortgage-cram-downs-by-bankruptcy-judges-are-taking-place-dbrs-2011-05-02
You can view more about DBRS here: http://dbrs.com/
Californian fighting her bankrupt loan originator up in their DE bkr.
They have been in bkr since 4-2-2007.
As of 12-31-2010, the liquidating trust still has over $50 million dollars in cash. This after paying the likes of Goldman, Chase etc. for their claims.
http://www.scribd.com/doc/55961911/MOTION-FOR-RECONSIDERATION-IN-NEW-CENTURY-LIQUIDATING-TRUST-MAY-2011