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Bankruptcy Law Change, How Does It Effect

Discussion in 'General Appraisal Discussion' started by Renee Borne, Aug 1, 2005.

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  1. Renee Borne

    Renee Borne Junior Member

    0
    Jan 5, 2005
    Professional Status:
    Licensed Appraiser
    State:
    Arizona
    I heard that the bankruptcy laws will change in Oct, how will this affect appraisers? does this mean more work? I have heard yes and no from the lenders. will this rejuvenate the refinancing boom?

    any insight is appreciated.
     
  2. Karl

    Karl Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Arizona
    More REO properties coming available. Bankruptcy laws or not, If you can't PAY there not goning to let you continue to PLAY. AFTER hours conversation with EXPERIENCED Real Agents/Brokers the Peak is very near as the prices have gone above the average income. Need to have 0 ZERO Debt in order to make the House Payment NEVER met a buyer with ZERO debt.
     
  3. Farm Gal

    Farm Gal Elite Member

    0
    Jan 14, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Nebraska
    Renee:

    My crystal ball says that the law as writ may eventually create a underclass of poor who are ineligible for standard housing, whom the courts say MUST repay their debts, who have already sucked the life out of their houses with no hope for future relief from that source or have already lost those homes.

    Some will get their acts together and get abck into low end houses.

    Some folks *may* downsize ahead of disaster... Some will find even that impossible with their debt load!

    End result is an increasing population of folks who will need rental housing but who will GO TO JAIL if they fail to pay their other bills.

    So lets see what that does to investment properties and Joe Average rental property manger? Not to mention the availability of 'decent' housing opportunities for individuals who had medical (or other family suport) issues beyond their control.

    Those persons entering the rental property management business may thrive as long as they are ethical and responsible. Some landlords will not be responsible.

    Which will lead to civic mandated requirements to control the slum loards which wil lead to who knows WHAT besides graft and payoffs, and OR huge public housing slums!

    I go on record as predicting a MESS.

    I dunno :unsure: ? about workload. I suspect 'down a bit' overall except in the REO niche.
     
  4. JSmith43

    JSmith43 Elite Member

    9
    May 5, 2003
    Professional Status:
    Certified General Appraiser
    State:
    California
    I have only read a summary of the BR law, and I didn't see anything about criminalizing failure to pay. Any backup on this?
     
  5. Bryan Kubiak

    Bryan Kubiak Junior Member

    0
    Oct 22, 2003
    Such a law would be nice. We could get LO's to pay up quicker if they knew jail time was around the bend. Of course COD is the only way but just thinking out loud.
     
  6. George Hatch

    George Hatch Elite Member

    21
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    I hadn't thought about it before, but if the laws are more strict about the criteria of getting in and out of BK, wouldn't that just encourage a lender to take a harder line with a struggling borrower? Less inclination to approve a short sale and more inclinatin to force the borrower to pay or force the borrower into repayment plans for any deficiency judgements. If the borrower was fewer options and more downsides to going BK they have more incentive to make things work.
     
  7. Otis Key

    Otis Key Elite Member

    0
    May 15, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    I don't really think it's going to change too much of what has already been around for some time, except now it will be harder, from what I've read and heard, for someone to BK out of almost all the debts. I've had a few friends who went BK and the attorney, one of the most respected BK ones in the state, said it was good it was done that early because there would have stricter requirements and prove with the new laws.

    As far as real appraisal work ~~~~ I don't see much of a change. The same poor people attempting to crawl up and being enticed with carrots of "no down and low interest and don't worry about those CCards" are still going to be suckered in by the HUD, AmeriDream and other programs. (If you didn't gather, I think it's a ticket to H3LL === it should be AGAINST the law)

    My perspective is that the perverable "BUBBLE" is near. Look around at what has gone up in price. For instance: houses, gas, telephone service, food, insurance, taxes, water, and, and, and, etc.

    What hasn't, in relative terms, gone up?















    Income!

    How long can the stretch of the dollar go on?
     
  8. JSmith43

    JSmith43 Elite Member

    9
    May 5, 2003
    Professional Status:
    Certified General Appraiser
    State:
    California
    I haven't waded through the actual legislation, however, I have read a few articles on the subject.

    Counseling is required. A consumer can't just go into a McBankruptcy lawyer with a list of creditors and assets, and slam dunk file. It is mandatory that they get worked over by special counselors.

    The prospect of being made to feel stupid for a few hours may be the most effective part of the bill. However, if counseling is done properly, I think it could cut down the repeat offenders. I can imagine the counselor provision was a bone thrown to a certain political party that supports creation of such constituency groups, but it might actually work.

    Summary of changes: If a person has a MEDIAN income below the average for the state, they can file CH 7 as long as they had the approved Financial Counseling course within 6 Mo. They need to also take an approved Financial Management Course before the BR is discharged, so they get a kick in the a$$ on the way in and a kick in the a$$ on the way out :eek: All done by certified counselors.

    People with large amounts of unsecured debt are funneled toward the Ch 13 side as are those high earners that earn over MEDIAN for the state. Also, homestead exemption is tightened to $125,000 and that provision is already in effect since April, 2005. The rest goes into effect in October.

    The effect for the mortgage industry: Hands down, Ch 7 filers get a chance at a quicker rehabilitation of their credit. They can go FHA within 2 years or even 1 year if the cause of the Ch 7 wasn't financial mismanagement (say they lost a leg in a shark attack & couldn't work for a while). Their debt ratio is likely to be much more favorable than if they were saddled with a Ch 13 payment for 5 years.

    I think lots of people with bad credit will wait out the creditors rather than file. This will be good for B/C lenders in that there will be lots of ugly deals to make happen. Eventually, it will be good for the economy and a moderating influence on interest rates for unsecured loans.
     
  9. Otis Key

    Otis Key Elite Member

    0
    May 15, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    Maybe yes - maybe no. Who knows anymore. I was raised to pay my bills, signed or handshack. I do both. Most don't anymore.

    :eek: :eek: :eek:

    Oh - I guess you need to be part of the US got that high of a homestead exemption! :eyecrazy: :eyecrazy: :eyecrazy:
     
  10. Karl

    Karl Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Arizona
    ""All done by certified counselors""


    Are these counselors going to be picked like MANY Appraisers are picked now??

    USE THE COUNSELOR THAT WILL MAKE IT RIGHT

    Just another layer of Licensed people that either do or don't have ETHICS.

    Nother law with already built in "Double talk" to get it to work when & where they want it too. & ignore it when need be. Sorry to sound negative but lets look back in this Forum to OH say 98-99 & yet nothing has changed. Small little incrimates BUT nothing MAJOR.

    Only way they'll be major change is when the Market hits a peak & starts a downward trend. HHHhhmhmmmm Maybe I'll see change SOON!!
     
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